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Friday, July 24, 1998 Published at 05:54 GMT 06:54 UK

Business: The Economy

Rover productivity attacked

Rover workers arriving to discover their fate

The UK Chancellor Gordon Brown has placed the blame for Rover's decision to cut 1,500 workers on the group's productivity.

Mr Brown dismissed suggestions that the workers are losing their jobs as a direct result of the government's economic policy.

[ image: Gordon Brown doesn't believe he is to blame]
Gordon Brown doesn't believe he is to blame
BMW, the German car giant which bought Rover four years ago, confirmed on Thursday that 1,500 of its 39,000 workforce will lose their jobs.

The group claimed that the job losses were caused by the sharp rise in the value of the pound which has made Rover cars less competitive abroad.

Gordon Brown calls for greater productivity on BBC Radio 4's Today programme
The pound has surged over the last year following six interest rate rises.

However, in an interview with the Financial Times newspaper, Mr Brown launched an attack on Rover, suggesting that some of the group's problems were of its own making.

Productivity gap

He said that productivity was definitely an issue in the UK car industry.

Mr Brown believes that the UK has to face up the fact that we have a 'productivity gap' compared to our competitors.

Mr Brown pointed out that the pound has only risen by 4 to 5 per cent against the German Deutschmark since the last election.

Under pressure

Mr Brown will come under further pressure today when figures are published which are likely to confirm that the UK economy is slowing.

But Mr Brown said that a slowdown in the economy was necessary to squeeze inflation.

He also defended his decision to give the Bank of England responsibility to set interest rates, rather than the government.

However John Redwood, trade spokesman for the Conservative Party, said that Rover job losses was a result of the problems of British manufacturing which have been unable to "export successfully given this government's economic policy mistakes".

City analysts have warned that up to 15,000 jobs in the UK's car parts industry are at risk over the next few years following Rover's announcement.

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