Thousands of UK jobs could go warns CBI

The CBI has warned that 86,000 manufacturing jobs could be on the line in the first half of the year as a renewed downturn has hits confidence and orders in every UK region.

The latest regional health check of UK manufacturing, published quarterly by the CBI and Experian Business Strategies, shows firms have been cutting jobs throughout the country since Christmas.

The organisation says that the new manufacturing decline is being driven by a sharp deterioration in domestic demand as weak global trading conditions spread to the home market.

For the first time since July 2001, no region recorded an increase in orders over the past four months. The sharpest declines in orders were reported in the north west, the east midlands and the east of England. Only Northern Ireland avoided a downturn, with orders remaining unchanged.

According to the report, five out of 11 UK regions expect a "modest recovery" in orders over the next four months, but this, say the CBI, is unlikely to boost employment with firms expecting to continue losing staff in every part of the country except Scotland.

The rate of job cuts has been fastest in the south east and slowest in the south west. The most rapid decline in jobs is now expected in the north west.

The survey also indicated a fall in export optimism for the year ahead in every region except Yorkshire and the Humber. The sharpest falls were recorded in the East Midlands and the North West. Every region reported political and economic conditions abroad as an increasingly significant constraint on export orders.

Peter Gutmann, Associate Director of Experian Business Strategies, said: "The deep pessimism in this survey is partly a timing issue. Sentiment was affected by the uncertainty surrounding the war in Iraq, which coincided with the survey period. However, the underlying malaise in the global economy is a depressing factor, clearly reflected in backward looking indicators. New orders in the past four months fell at their fastest rate for four years. Manufacturers clearly see little to excite them in the current environment. With conflict in Iraq behind us, it remains to be seen whether a global recovery will develop which, coupled with sterling's fall over the past year, will provide some relief."

Doug Godden, CBI Head of Economic Analysis, said: "These figures will be hugely worrying to every region in the country. Estimates based on the survey show that 86,000 manufacturing jobs across the UK are expected to be cut in the first half of this year. Waning domestic demand and economic uncertainty have dented confidence everywhere. The Bank of England must give the economy a boost with a rate cut on Thursday. There remains little danger from inflation."

(GMcG)