ICI and gas jobs cut but CBI is optimistic

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The Independent Online
MORE than 7,000 job losses were announced by Imperial Chemical Industries and British Gas yesterday, but a survey by the Confederation of British Industry suggested that manufacturing may at last be on the verge of recovery.

ICI said it would axe about 4,000 jobs in Britain and a similar number overseas. The losses come as ICI splits into a bulk chemicals company and a new company, Zeneca, to specialise in drugs and agricultural chemicals.

ICI has cut its workforce by more than 21,000 in the past two years, closed about 40 plants and sold more than 40 businesses. British Gas is to shed 3,200 jobs from its supply business, on top of last month's announcement that 1,200 headquarters jobs will go.

Cedric Brown, chief executive, warned that more losses could follow an inquiry by the Monopolies and Mergers Commission. Sir James McKinnon, the gas industry regulator, has urged the commission to recommend its break-up.

Royal Dutch Shell, the world's biggest oil group, also said that it planned to shed hundreds of jobs in its British exploration, chemicals and refining operations.

The wave of redundancy announcements came as the CBI published its most upbeat survey of manufacturers since the post- election euphoria of last spring.

The pound's devaluation has triggered a sharp improvement in export orders. Responses to CBI surveys are typically overoptimistic, but the size of the improvement suggests on past trends that a recovery may be in sight.

Order books are fuller than for two-and-a-half years, although they remain below normal levels. But stocks of unsold goods remain higher than companies want, suggesting a rise in demand could be met from stores.

The revival in orders has encouraged manufacturers to consider increasing prices.

Signs of revival in domestic spending also emerged from Bank of England figures showing that the amount of cash in the economy is growing above the Government's target range for the second successive month.

The narrow measure of money M0 - largely notes and coins - grew by about 4.6 per cent in the year to February, a higher growth rate than last month and above the 4 per cent target ceiling.

Nigel Richardson, of the City firm Yamaichi, said it pointed to 'a sustainable, but modest, recovery in high street spending'.