Production at the mill in Hertfordshire will grind to a halt within a month, but 25 staff in warehousing, admin and sales will stay at the Hemel Hempstead base.

"It's an absolute disaster from a local viewpoint," said Geoff Usher, regional officer for East of England Amicus GPMS. "It's close to the devastated Buncefield oil depot and is one of the biggest local employers.

The mill has made a loss for some time and investment and labour-cost competition from Eastern Europe and China proved too great.

"We had a good relationship with the company and worked with it to reduce costs. But the decision was made on a global basis," said Usher.

The union had reached an agreement with management on "substantially enhanced" redundancy terms and financial help with training and pension advice, he said.

Nash made 30,000 tonnes of uncoated business paper a year and paper production on the site dates from the 1700s. Managers at the mill declined to comment on the closure.