Jobs Threat Taints Growth Hope: While UK Order Levels Continue to Improve Compared with Those of Germany and France, There Are Pockets of Gloom with Job Losses Predicted in Engineering and the Car Industry

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While UK order levels continue to improve compared with those of Germany and France, there are pockets of gloom with job losses predicted in engineering and the car industry

* Inflation in the UK rose to 2.5% in January from 1.9% in December last year - the biggest rise for more than two years. The underlying inflation rate, which excludes mortgage interest payments, rose slightly from 2.7% to 2.8%, still below the Bank of England's forecast of 3%.

The Engineering Employers Federation predicts the loss of a further 47,000 jobs this year in the UK engineering industry, bringing the total number lost in the sector since 1990 to more than 400,000. Nissan, last year's top car exporter from the UK, produced 36,000 fewer cars than planned because of recession in Europe. The workforce at Sunderland is expected to be reduced by 600 to 4,000 this year. Production output is expected to return to near-normal, five-day and three-night shifts.

* Manufacturing output in electronics and motor vehicles is forecast to grow by over 2% this year. Engineering output is expected to grow only slightly and output in aerospace is set to continue its downward trend. Manufacturing output in the UK (excluding oil and gas) fell by 0.5% in December, raising fears about the strength of the recovery. But the quarterly trend is still upwards. In the fourth quarter last year it was 0.5% higher than in the third quarter and 22% higher than the same period a year earlier.

* A recent Mori survey showed that investment in R&D came bottom of the list in UK manufacturers' plans. …