Industry in big trouble, says TUC

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THE GOVERNMENT was warned yesterday that the economy was "hours from recession" as leaders of more than a million workers and employers formed a highly unusual alliance to publicise the plight of manufacturing.

Roger Lyons, leader of the Manufacturing, Science, Finance union warned that half a million jobs would be lost if the Bank of England continued to pursue its anti-inflationary policy.

If the Bank's monetary policy committee genuinely believed that people should be thrown out of work because the economy was over-heating, it was economically illiterate and socially outrageous, he said last night, on the eve of the annual Trade Union Congress conference in Blackpool.

His partner in the alliance, Ken Jackson, leader of the Amalgamated Engineering and Electrical union spoke of the "twin evils" which were dragging the economy down. "The last time a government pursued a high interest rate and high pound policy it destroyed 40% of British industry," he said. "The Tories tried to kill off manufacturing. The Bank seems to be attempting to finish the job."

The remarks by the two senior union leaders presage a rough ride for Eddie George, governor of the Bank of England, who will make his maiden speech to the TUC tomorrow. Addressing delegates today, John Prescott, deputy Prime Minister, will mount a vigorous defence of the Cabinet's economic policy. Both men however will be fighting against a growing wave of pessimism among trade unionists. Some of the blame for mounting redundancies will also be laid at the door of Peter Mandelson, Secretary of State for Trade and Industry, who addresses Congress on Thursday.

The aims of the alliance have won the support of the Engineering Employer's Federation. The initiative seeks to raise profile and status of manufacturing, to persuade the Government of its importance and to ensure that industry's competitiveness is taken into account during economic decision-making.

David Yeandle, head of employment affairs at the employer's organisation, said that success on all three fronts was "critically important" to Britain.

Gloom over the economy prompted a rift between some of the TUC's biggest affiliates. While Mr Jackson maintained that Britain should enter the European Monetary Union as soon as possible, Bill Morris, leader of the Transport and General Workers Union, argued that such a move would make the economic downturn worse. The clash over the currency will almost certainly surface at next month's Labour Party conference.

The Government will also face growing opposition to itsPrivate Finance Initiative. The GMB general union yesterday switched from provisional support to opposition to the policy which seeks to involve private money in public projects. It believes member's terms and conditions will be eroded when private companies assume responsibility for state services.