Industry leaders have urged the Government to bolster investment in the hard-pressed manufacturing sector or risk losing more business overseas.

The Engineering Employers'

Federation (EEF)

and 24 other trade bodies issued the warning in a submission to the Chancellor ahead of this year's pre-Budget report.

The submission, An Environment for Investment, argues manufacturing will suffer if already high costs in the sector rise any further.

It calls on the Government to introduce a number of measures to cut costs.

These include significantly higher capital allowances or a tax credit for investment, a review of the Climate Change Levy and a reduction in insurance premium tax.

EEF director general Martin Temple said: "Manufacturing competes globally and the Government now has a clear choice to make between protecting our competitive advantage or continuing the trend of the last few years of the gradual erosion of our flexible, low-cost environment.

"If we continue to make the UK a less welcoming environment for manufacturing companies, business will simply vote with its feet and the movement abroad of our manufacturing base will accelerate."

The report also called on the Government to promote higher skills in industry.

It wants funding for apprenticeships for 19 to 24-year-olds raised to bring it in line with those for 16 to 18-year-olds and a relaxation of age restrictions.

It also wants the Chancellor to fulfil spending review commitments of increased funding for education and skills.

The report calls for a shake-up of pensions in the sector, including publishing a timetable for replacing the minimum funding requirement.

Mr Temple said: "While we strongly supported measures in the last Budget and the spending review, these have been more than outweighed by the rising cost burden.

"In the current climate of weak order books and an uncertain outlook, it is vital Government avoids making life even more difficult."

Industry bodies backing the proposals include the Agriculture Engineers'

Association, Gauge and Toolmakers' Association and Society of Maritime Industries.