THE head of one of Britain's most powerful business groups last night gave a stark assessment of the future of steelmaking on Teesside.

Digby Jones, director general of the Confederation of British Industry, said crisis-hit Corus operations in the region must look to the value-added end of the market because it cannot compete with China.

The Anglo-Dutch company announced last month that production on Teesside would not be needed internally, leaving the Redcar plant to sell its products on the open market.

Mr Jones told the CBI's Teesside annual dinner that the British Government should not follow the route of US, where George Bush deployed tariffs to artificially protect flagging steel companies.

Instead, he suggested money should be spent retraining staff to produce products that required a higher level of skill to make.

He said pressures from emerging Far Eastern markets would only increase in the years to come.

"If you are going to prop up industries where China is always going to beat us, they will still be beating us in five years' time," said Mr Jones.

The declaration provoked anger among steel unions, with Mick Mannion, of the Iron and Steel Trades Confederation, saying: "He should just shut up and go away."

Mr Mannion said: "If we gave up everything the Chinese wanted to go into, we would not have much of a manufacturing industry left."

Mr Jones spoke on the wider issue of global competitiveness and outlined key aspects for national competitiveness such as skills, labour market flexibility and tax competitiveness.