Labour MPs joined trade unions, the Tories and the Liberal Democrats in demanding that ministers prevent further job losses this autumn by acting to curb Britain's high interest rates and strong pound to help companies weather the worldwide economic storm.
But Mr Blair ruled out any change of course and ministers are bracing themselves for criticism of their handling of the economy at the annual TUC and Labour Party conferences later this month.
With fears that unemployment could rise by up to 500,000, union leaders and Labour activists will accuse the Government of adopting a policy which allows the jobless queue to lengthen so that its 2.5 per cent inflation target can be hit. But ministers will argue that allowing inflation to rise would put many more jobs at risk.
The Government is trying to prevent further job losses in South Wales, where Ron Davies, the Welsh Secretary, is seeking assurances that Korean- owed LG will go ahead with a pounds 1.2bn electronics plant, the biggest inward investment project in Britain. There are fears because of a planned merger with rival Hyundai.
The Prime Minister insisted that the closure of the Fujitsu plant at Newton Aycliffe in his Sedgefield constituency was due entirely to the collapse of the world market for semiconductors.
The Prime Minister was "very saddened" by the job losses. "It is a blow not just for the employees and their families but for the entire local community."
The loss of the plant, which will close in December, is an embarrassing setback for Mr Blair and for Peter Mandelson, the Trade and Industry Secretary, who represents the neighbouring seat of Hartlepool.
Just days after Mr Mandelson moved to the Department of Industry in July, Siemens announced the closure of its Tyneside semi-conductor factory with the loss of 1,100 jobs.
William Hague, the Tory leader, said the Government was making the world economic downturn worse rather than helping British companies weather the storm.Reuse content