Call to action: Hewitt

The unions have called for further interest rate cuts in response to Patricia Hewitt's morale boosting urge to manufacturers.

TUC general secretary John Monks called for action from the trade and industry secretary to help get the trade sector out of recession and end the wave of job losses.

"I welcome the strong case for manufacturing made by the secretary of state to the City. It is significant that they were reminded of the importance of the UK making things. It's also good to see a clear recognition of the importance of euro membership to the manufacturing sector," Monks said.

"But this is just a start. We must make sure that our manufacturing base can survive current difficulties and stands ready to take advantage of recovery. That means we must have a budget for manufacturing, further interest rate cuts, more help for the regions and a clear determination to get a more competitive pound."

In a speech to the city on Wednesday, Hewitt urged manufacturing firms not to despair despite the ongoing recession in the sector. The trade and industry secretary warned that the gloom surrounding the industry may damage its prospects.

Expressing sympathy for redundant workers, Hewitt said manufacturing is viable but stressed that activities may be different in the future.

Her comments came as she used an interview in The Times to warn that UK membership of the single currency was an important issue for manufacturers struggling to import into the euro zone with high sterling exchange rates.

She highlighted Japanese companies investing in the UK, such as car manufacturers, who are now calling for membership of the euro.

"The issue of concern for inward investors in Japan is, of course, the euro and the exchange rate. There does have to be something wrong when some of the most productive plants in the world are struggling to export profitably into the eurozone," she said. "It suggests that there is something fundamentally wrong in the current euro/pound exchange rate."

She said that further inward investment was "extremely important" to the future of manufacturing industry and points out that it is one of Gordon Brown's five economic tests that will decide whether the government calls a referendum on euro entry.

Vincent Cable, the Liberal Democrat shadow trade and industry secretary, called on Hewitt to make the case for joining the euro.

"Her comments are unsurprising since the latest figures show that British manufacturing is down by five per cent over the last year, almost entirely due to Sterling's exchange rate against the euro," he said.

"Hewitt's comments reinforce the judgement that inward investors, who think long-term, will want to be inside the eurozone, because of its added stability and price transparency. It is unfortunate that cabinet ministers keep engaging in this shadow boxing with the chancellor without making a discernable impact on government policy."