The government must invest in small to medium-sized business (SMEs) to minimise the threat to a key sector of the jobs market for IT contractors, it has been claimed.

SMEs contribute around 41 per cent of the national income and will continue to play a key role in the recovery of the economy as a whole, according to Coffee Republic founder Sahar Hashemi.

Given the right investment, manufacturing will be a key area of growth for UK SMEs, fuelling the economy and creating jobs, Mr Hashemi claims.

He added: "It will have to be manufacturing with an edge. We do things that people don't.

"I definitely think this could be possible, even against the cheaper countries. We know how to do it differently and come up with unique solutions."

Demand from home and abroad for UK manufacturing products continues to increase, according to the Confederation of British Industry, although so too do production costs.