CBI warns 86,000 jobs to go in industry

The CBI repeated its call for a cut in interest rates yesterday after estimating that UK manufacturing industry will lose 86,000 jobs in the first half of this year.

"Waning domestic demand and economic uncertainty have dented confidence everywhere," said Doug Godden, head of economic analysis at the CBI. "The Bank of England must give the economy a boost with a rate cut on Thursday. There remains little danger from inflation."

The rate of job cuts has been fastest in the South-east and slowest in the South-west, according to the latest quarterly CBI/Experian survey.

The renewed manufacturing downturn has hit confidence and orders in every UK region, the survey found. 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.

"These figures will be hugely worrying to every region in the country," said Mr Godden. Only Northern Ireland avoided a downturn, with orders remaining unchanged.

While the survey found that five out of eleven regions in the UK expected a "modest" recovery in orders over the next four months, manufacturing firms still expected to continue losing staff in every part of the country except Scotland. The most rapid decline in jobs is now expected in the North-west.

The survey also showed a fall in export optimism for the year ahead in every region except Yorkshire and the Humber. Every region cited 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."

He added: "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."