Jobs at risk as orders and confidence fall to two-year low, says CBI

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The Independent Online

Almost 45,000 manufacturing jobs will be lost in the first half of this year thanks to a slump in factory orders, the country's largest employers' group warned yesterday.

Almost 45,000 manufacturing jobs will be lost in the first half of this year thanks to a slump in factory orders, the country's largest employers' group warned yesterday.

The Confederation of British Industry said orders, output and confidence had all fallen back to their lowest level for almost two years in the first few months of the year. Factories' costs had risen at their fastest pace for 10 years putting companies' profits under a "continual squeeze in manufacturers' margins that is impacting jobs".

The CBI warned that about 22,000 jobs would go over the coming three months, following the 21,000 jobs that it said had already been shed this year. Sir Digby Jones, the CBI's director general, said: "It really is a disappointing time for manufacturing. Orders are falling sharply and costs rising - both at rates that give us enormous cause for concern."

He urged the Bank of England to ignore calls for any more rises in interest rates and stand ready to cut borrowing costs if the sector took another turn for the worse. "With the data this morning, the data on the housing market and lots of housebuilders telling me that it is more difficult to sell a home, I cannot see any reason to put them up," he said. ". If we have another month or two of this it will be more so."

Sir Digby said the gloomy survey was further evidence that any post-election tax raid on business would "hit a manufacturing sector already in a fragile position ... We will resist any such move fiercely," he said. "Frankly business has had taxation up to here. If they say they will do another load of stealth taxes then they will meet amazing resistance from the British business population."

Sir Digby also displayed a negative attitude towards Labour's business credentials and praised some elements of the Conservatives' business manifesto.

He praised Labour's cuts in capital gains taxes and their record on economic stability. But he criticised the Government for embarking on a regulatory strategy that has "fettered British businesses from getting on with doing business".

The Tory leader, Michael Howard, was praised for describing profit as a "good thing", adding: "I have not heard Tony Blair or Charles Kennedy say that." The CBI survey showed the number of companies reporting a drop in orders outnumbered those seeing a rise by 18 per cent, a dramatic worsening from 4 per cent in January and the worst since July 2003.

Ian McCafferty, the CBI's chief economist, said: "There are some worrying signs that the pick-up in manufacturing since 2003 is in danger of petering out."

He blamed a $12 (£7) a barrel surge in oil prices since the start of the year and the modest appreciation in sterling against the euro for the worsening environment. The pound fell against both the euro and the dollar yesterday as traders said the survey had reduced the chances of another rate hike.

"The softer tone in manufacturing alongside the increasing caution of consumers will make it difficult for the monetary policy committee to sanction any further tightening in the neat term," said Simon Rubinsohn, the chief economist at the fund manager Gerrard.

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