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Tuesday, 7 May, 2002, 11:21 GMT 12:21 UK
CBI upbeat on manufacturing
Factory worker
Manufacturing has suffered in recent years
Manufacturing in nearly every region of the UK is showing signs of coming out of recession, the Confederation of British Industry (CBI) said on Tuesday.

The UK business lobby's latest quarterly review of regional trends showed the most widespread rise in confidence for more than two years.

Factories in all areas except the south west of England are expecting to see output rise over the next four months.

The CBI said: "After two years of unrelieved gloom there is a widespread feeling among manufacturers in the regions that they have turned the corner, putting the worst of the recession behind them."

Output falling

The upturn in optimism was at its strongest in the north east and north west of England, which had seen the sharpest falls in the past 15 months.

Despite the increase in confidence, output continued to decline over the last four months in all regions except Wales, where there was no change.

Doug Godden, CBI Head of Economic Analysis, said it was encouraging news for optimism, but warned that any recovery will be from a low base, with most regions saying they have continued to contract in the past few months.

He said: "Prices and profits remain under pressure and investment intentions are generally weak."

The CBI's Director General, Digby Jones warned that job losses in manufacturing would continue.

Skilled work

He said it was at the skilled and specialised end of manufacturing that employment will increase.

The report follows a survey by the Chartered Institute of Purchasing and Supply (CIPS) earlier this month, which showed its manufacturing index rose in April to its highest level since December 1999.

Demand increased, with manufacturing exports rising at their fastest rate for five years, the CIPS said.

The manufacturing sector has been struggling in recent years, particularly with the strength of sterling which has made UK firms' exports more expensive.

Meanwhile, the CBI and trades union group the TUC joined forces to urge the government not to cut support for exporters and investors in overseas markets.

Job losses

The two groups argued in a joint letter to the Prime Minister that any moves to weaken the Export Credits Guarantee Department (ECGD), which underwrites exports and investments, could lead to a "significant" loss of business and jobs.

The ECGD is currently being reviewed, but the CBI warned that the "uncertainty" was already affecting investment decisions.

The letter said: "If the Government were to abolish ECGD or to curtail its operations, the effect on UK manufacturing would be disastrous.

"Most large manufacturing companies have become global operations and are already under pressure to switch activities to other countries."

Mr Jones told BBC Radio 4's Today programme that 60,000 jobs depended on the system.

See also:

01 May 02 | Business
Surveys raise UK economy's hopes
23 Apr 02 | Business
UK manufacturing finds new optimism
06 Aug 01 | Business
Q&A: The manufacturing recession
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