The British Chambers of Commerce (BCC) urged the Government to increase investment in the manufacturing sector or risk it dying out altogether.

In its submission to the Chancellor ahead of his pre-Budget report, the BCC said the sector remained weak, with little improvement in productivity, while costs were rising.

It urged the Government to throw its weight behind the hard-pressed sector, which has suffered as the world economy slumps.

The BCC said: "Despite a number of initiatives, business sees little improvement in manufacturing productivity in this country and the Government needs to be proactive and invest in remedying this, or British manufacturing will die out."

Manufacturing accounts for 30 per cent of the Sussex economy.

The BCC, which represents small and medium-sized companies, hit out at the high levels of regulation, for which the Government had yet to offer a viable solution, and pensions.

It said business was facing a crisis and wanted tax concessions on share dividends restored immediately and the earnings-related state pension provision scrapped as it is costly and inefficient.

President Isabella Moore said: "Our submission highlights some very serious concerns among businesses regarding Government policy and its execution.

"There is dissatisfaction about the National Insurance increase and we have our doubts the funds raised will help Government solve problems in the NHS and education.

"Britain's manufacturing productivity is lagging behind its European partners. There is additional concern employees may all end up without a reasonable pension."

The BCC wants the Chancellor to raise the research and development tax credit, provide funds to foster the relationship between higher education and business and continue the 100 per cent allowance for information technology investment after next March.