by Chris Holland Business Reporter While manufacturing is expected to continue leading the UK’s economic recovery, Government cuts could hit one in five firms through reduced order books, a new report warns.

EEF, the manufacturers’ body, has urged Chancellor George Osborne to use the Budget in March to stimulate growth. Exports, particularly to emerging markets, would continue to lead growth during 2011.

The report said manufacturing should grow at 3.5 per cent this year, ahead of the overall UK level of 2.1 per cent. Top performers are expected to include mechanical engineering and metal products, which have a high level of exposure to export markets where demand is likely to be strongest.

Andy Tuscher, the EEF regional director, said: “At the start of 2010, shell-shocked from the worst recession in 80 years, forecasters across the country were wary of predicting anything more than very modest growth.

“But manufacturing picked up the baton and delivered its best performance in 16 years. “Manufacturing now looks set to be at the heart of the rebalanced growth the economy needs with sectors most exposed to international markets likely to post the highest growth.

“But there are continuing risks to growth both here and abroad. To maintain momentum the Government must keep its foot down on policies to accelerate growth. “The fact that the UK is now on the road to recovery will not necessarily make the job easier and the forthcoming Budget will offer the first major point when this resolve to clear away obstacles to growth must be demonstrated.”

Meanwhile, former Deputy Prime Minister Lord Heseltine has urged West Yorkshire firms to bid for cash from the Government’s new £1.4 billion Regional Growth Fund.

They have until January 21 to submit proposals for the first bidding round.

During a visit to the region, Lord Heseltine, who chairs the fund’s advisory panel, met entrepreneurs and business representatives and urged them to submit high-quality proposals to help communities in Yorkshire to flourish.

The Fund, launched by the Government, will support projects and programmes with potential for economic growth and private sector job creation. It will help communities dependent on the public sector to make the transition to sustainable private sector-led growth.

Lord Heseltine said: “The Regional Growth Fund presents an opportunity for businesses and entrepreneurs in Yorkshire to help shape their own economic future.”

More information is available from bis.gov.uk/policies/regional-economic-development/regional-growth-fund.