Murphy under pressure over jobs

The strong pound makes Welsh steel uncompetitive

The Secretary of State for Wales is expected to dismiss talk of a crisis in the steel industry.

But Paul Murphy is expected to come under renewed pressure from MPs at a meeting of the Welsh Grand Committee to do more to preserve jobs in the manufacturing sector.

Paul Murphy: No crisis

Several backbenchers are expected to use the meeting to warn of the damage they believe the exchange rate is causing industry in Wales.

Concern has grown recently over the Corus-owned steelworks at Llanwern near Newport and at Port Talbot.

The current weak state of the euro against the pound makes their exports more expensive on the continent, putting jobs at risk.

Mr Murphy is expected to tell MPs that the Government understands the problems facing the steel industry and the manufacturing sector in general.

But he is also expected to add that it would be wrong to talk of a crisis at the moment.

Mr Murphy has warned that the Government cannot offer the steel industry direct subsidies because it would break European rules.

He said he accepted that the steel industry was facing difficulties, but he warned against over-exaggerating the problems.

'Boom and bust'

Meanwhile, the Prime Minister is due to tell the Confederation of British Industry that he will not bow to demands for policies which would boost exports by devaluing the pound.

Tony Blair will argue that artificially devaluing the pound would destabilise the economy.

It would mean a return to the "boom and bust" economy that he wants to see the back of, he will add.

But union and business leaders have said that sterling is over-valued by 30%, which has put a huge strain on the manufacturing industry.

Mr Murphy and First Secretary Rhodri Morgan are due to meet the Iron and Steel Trades Confederation union within the next week.