Monsanto, the huge American biotechnology company which has pioneered GM crops, is withdrawing from many of its European operations and laying off up to two thirds of its British workers.
The announcement came on the eve of the publication of the Government's GM crop trials today.Tony Blair is thought to be in favour of GM crops, stressing the need for Britain to be in the vanguard of new industries that could be worth billions of pounds.
But ministers will be under pressure to limit, or scrap, further development of GM crops in the face of public opposition. One industry insider said the international biotechnology business was becoming disillusioned with Europe's anti-GM stance.
"If there's no market for something, you go elsewhere," he said. "The big companies are looking to China, South-east Asia and South America."
Monsanto said its decision to pull out of conventional cereal crops in Europe was not related to the continent's moratorium on commercial growing of GM crops. But a spokeswoman added: "Monsanto is obviously frustrated by the amount of time it has taken for GM crops to be accepted in Europe, but this decision is part of a much bigger global realignment."
Monsanto said it was closing its multimillion-pound research centre in Cambridge with the loss of up to 80 highly skilled jobs.
Employees heard of the decision for the first time yesterday afternoon even though the plan had been circulating among analysts outside the company earlier this week.
On Tuesday, a company spokesman denied there was any intention to close some British operations. But 24 hours later Monsanto confirmed that it was to shut its European cereals business. "This results from a strategic decision ... to realign the company's core businesses in order to focus on those projects that will best capitalise on its market and technological strengths," a spokesman said.
Today the results of the Government's farm-scale trials of three GM crops will be released. These could give European governments the ammunition to ban the commercial growing of some varieties if they can be shown to damage the environment.
Last month, a test of public opinion in Britain found that the majority of people did not want GM food in their supermarkets. In a series of questions that formed part of the "GM Nation" debate, 85 per cent of respondents said they believed GM crops would benefit producers rather than consumers, 86 per cent said they were unhappy with the idea of eating GM food, 91 per cent said they thought GM crops had a potentially negative effect on the countryside and 93 per cent said GM was being driven by profit rather than public interest.
Monsanto said its closure could affect up to 80 of its 125 British employees, who mostly work on the breeding of conventional varieties of winter wheat, spring wheat and spring barley. Crop breeding centres in France, Germany and the Czech Republic will also be hit by the cutbacks.
Monsanto said it was reducing its global workforce of 13,200 by between 7 and 9 per cent, but the precise number of jobs lost in Britain would not be announced until the end of the 90-day consultation period required by law.
Jeff Cox, Monsanto's UK general manager, said the company hoped to find a buyer for its conventional cereals business which could save some of the jobs.
"Monsanto will remain in the UK as a streamlined crop protection and oilseed rape business, with our flagship plant protection product - Roundup - continuing to lead the market," Mr Cox said.