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The manufacturing sector should be receiving government support if the country is to survive through the current recession, a new report says.

The study by the Work Foundation published today claims that if the government is serious about helping the 'real economy', loan guarantees and emergency funding should be extended to the manufacturing sector also.

The paper argues that with the UK's financial services in question, the high and medium tech manufacturing business which have strong service portfolios on top of traditional product offerings – known as the "manu-service" sector – represent one of the best hopes of delivering an economic upturn.

Ian Brinkley, associate director at The Work Foundation, said: "The question needs asking - what are we going to live on in the future? Modern manufacturing is once again facing a battering from the recession, but it would be a big mistake just to write the sector off.

"We need to preserve as much of the industrial base as possible because once it is lost it is near impossible to get back again. Despite the mythmaking around the demise of manufacturing, the sector remains extremely important for jobs, exports and GDP."

Today companies have evolved so that the old method of separating manufacturing and services no longer reflects the inter-connected, interdependent nature of modern manufacturing, today's report states.

The study claims companies such as Rolls Royce now make as much, if not more, money from service contracts, sales of licences and hours of flight time on their engines as from the engines themselves.

Also, high to medium tech manufacturing is producing nearly as much added value to the UK economy (ten per cent) as high tech services (ten per cent), the authors continue.

With the pound so low against other major currencies at present, exporting opportunities have never been so competitive, but this has been welcomed
as good news in the report, since 70 per cent of all manufacturing exports came from high to medium tech 'knowledge economy' manufacturing sectors.

Today's report concludes by recommending the government backs the manufacturing sector by providing the necessary finances it needs to evolve and grow.

Support for research and development is also encouraged, while a greater regional pattern of growth in manufacturing is also recommended to avoid the concentration of knowledge intensive business in London and the south-east.