There will be 160,000 job losses in manufacturing this year, according to
the Engineering Employers’ Federation.
Its Engineering Outlook report also predicts a 2 per cent fall in
engineering output, which accounts for nearly half of all manufacturing.
It estimates that a recovery is unlikely before the second half of 2002, but
concludes that this should gain momentum in 2003.
This is dependent on a recovery in world trade and a gentle decline in the
value of the pound.
By sector, the downturn has been led by electronics, with output falling by
6.6 per cent in 2001. However, all sectors have contracted, including transport,
which has been severely affected by a drop in orders from the aerospace sector
following the events of 11 September.
As a result, the EEF stresses the need for the Bank of England to allow some
breathing space for recovery to begin and to remain open to the need for
further cuts in interest rates if necessary.
The call follows a substantial deterioration in new orders during the final
quarter of 2001.
EEF director-general, Martin Temple, said: "Conditions for engineering
and manufacturing remain very difficult and many members are finding life as
tough as in the 1990-92 recession.
"Both the Bank of England and the Government have a role to play in
minimising costs and maximising confidence and, as such, it is far too early to
be talking about increasing interest rates. The bank must be ready to cut again
By Ben Willmott