BUSINESS leaders urged the Chancellor today to help manufacturers prepare for a recovery from the recession by using this month’s Budget to boost skills and innovation.

The Engineering Employers Federation warned that manufacturing was suffering more than at any time in the past 30 years, with output expected to slump by about ten per cent this year.

In its Budget submission, the group said there was an “urgent need” for short-term measures to help motor firms and other manufacturers.

Chief economist Steve Radley said: “The Chancellor has made a good start by staggering the increase in business rates companies were facing this year. In the meantime, acute pressures remain and threaten to undo the great strides made by manufacturers in recent years to improve performance.

“Without further action we risk further hollowing out of the supply chain and the loss of viable companies in key sectors.

“The Government must back its rhetoric on the need for a more balanced economy with firm actions targeted at supporting companies’ efforts to retain skilled employees and maintain investment.”

Another report today by Lloyds TSB showed that confidence among British businesses remained weak last month, despite a slight increase in firms’ optimism over activity levels.

A survey of 200 firms showed that for the 16th consecutive month more companies were pessimistic, rather than optimistic, about the economic outlook for the UK.