JOB losses in the manufacturing sector are almost unavoidable as North-East companies look to improve productivity and become more efficient, an industry expert said yesterday.

Alan Hall, regional director of the engineering employers' federation (EEF) Northern, said manufacturing firms were facing acute pressures with the soaring cost of energy and business tax.

"Companies are looking to improve productivity and become more efficient but one side effect of this is almost unavoidable job losses," he said.

"Manufacturers are facing quite a positive and buoyant outlook in terms of business opportunities and possible growth, but they are facing acute pressures in terms of their costs.

"Energy costs are obviously a major factor, but other issues include pensions and the business tax burden, which is sitting at an all time high."

EEF analysis of the UK's business taxation found that in 2005/06, companies will be paying an additional £2.2bn a year in corporation tax and an additional £5.5bn due to other business-related tax changes since 1997.

Employers' body the Confederation of British Industry (CBI) has warned that the tax burden on business, which it says has risen by £50bn since 1997, is harming Britain's international competitiveness and the long-term future of the economy.

In its latest economic forecast, the CBI predicted that jobs would continue to be lost in the manufacturing sector over the next few years as the economy only picked up gradually.

The business group said it believed other sectors would see some rise in employment, but not enough to reverse recent increases in the jobless figures.

The CBI's chief economist, Ian McCafferty said future growth depended on the Bank of England's decision on interest rates.

"The CBI believes there will be room for a quarter point cut in the coming months," he said

"Without it, growth will struggle to get back to trend in 2007 and inflation is likely to undershoot the Bank's target rate of two per cent."