Jobs will continue to be lost in manufacturing firms over the next few years as the economy only picks up gradually, the Confederation of British Industry forecast today.

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. Its prediction came after the CBI in February painted a gloomy picture for manufacturing in the West Midlands - saying it was set to contract more in the region in the following three months than anywhere else in the UK.

The organisation - in a study with credit data specialist Experian -- claimed up to 6,000 jobs could go as companies retrenched in the teeth of soaring costs and falling orders

Today the national body said manufacturing output was expected to show some recovery in the response to resilient global demand.

Having seen a contraction last year, output would grow by 0.6 per cent this year and in the next by 1.6 per cent next year.

Employment in manufacturing was expected to continue to decline over the next two years.

It said the economy would pick up only gradually, with consumer spending growth remaining subdued into 2007, because of modest growth in disposable incomes, higher energy bills and other debt burdens.

The CBI also predicted there would only be modest growth in business investment over the next two years.

Chief economist Ian McCafferty said: "Our forecast is for marginally faster growth in 2006 but still pegs it below trend, with slightly better news for next year."

The latest forecast claims it is clear the Budget needs to rein back business tax.

That was a call backed by Chris Clifford, regional director of the CBI in the West Midlands.

"We would like to see no further increase in business tax over the next few years and also the reining back of the public spending plan," he said.

The CBI's economic forecast suggests that the economy will pick up only gradually.

The March report follows better-than-expected GAP growth in the last quarter of 2005.