The Government will acknowledge the mounting pressures facing British manufacturing next week when ministers publish a strategy policy for the sector.

The latest initiative, which has been months in the making by the Department for Business and Enterprise, could be launched to coincide with a special meeting of the Cabinet in Birmingham, The Times has learnt.

The strategy document is expected to emphasise the opportunities to business from developing a low-carbon economy, as John Hutton, the Business Secretary, has outlined previously. It is also likely to look at that the role government procurement can play in helping to boost manufacturing. Previously ministers have looked at the role of government procurement for the defence industry, particularly in terms of the timing of contracts. This could be extended into other areas in which the Government is a bulk buyer, such as medical equipment.

A Downing Street team led by Baroness Vadera, the Business Minister, has spent most of the year taking soundings from industry. The policy is expected to recognise that manufacturing has restructured significantly over recent years in response to exchange-rate difficulties and to the shift of manufacturing to low-cost countries. It will also recognise that the sector is still under considerable pressure.

Efforts to promote a more modern, dynamic image for manufacturing is seen by industry as important as the economic slowdown takes its toll. Last week, the Toyota factory at Burnaston, Derbyshire, became the first British car plant to announce a significant cut in production because of poor car markets across the world.

The strategy policy is unlikely to advocate spending to help industry.

EEF, the manufacturers’ organisation, will give warning today that new orders for industry have plunged to a three-year low. The fall in new orders has been driven largely by a collapse in domestic orders as exports show more resilience.

The economic slowdown is also beginning to hit investment, with members of the EEF reporting a negative balance (-1 per cent) for the first time in ten quarters. Nevertheless, the sector reported its twelfth consecutive quarter of growth because the drop in orders has not yet taken full effect at the workplace.

Steve Radley, chief economist at the EEF, said that although manufacturing had held up well, economic pressures were starting to take their toll on companies.

Mr Radley said: “Given that the Bank of England’s hands remain tied in the short term, it is now essential that the Government tackles this turning point for the economy head-on. It must avoid adding any further costs to business and put in place policies which will provide the building blocks for an upturn.”

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