A sharp decline in the 'offshoring' of jobs from Britain to cheaper locations in Asia and eastern Europe is being accentuated by the recession, Financial Times research has found.

Lack of funds for investing in new capacity abroad coupled with the dwindling cost advantages of shifting work to countries such as China and India are making companies think twice before moving.

There could even be a limited reversal, particularly in manufacturing, with some employers locating future projects in the UK – where they can be close to customers – once demand picks up. This comes in spite of concern about high-profile cases such as Hewlett-Packard’s decision to cut more than 700 jobs at Erskine, near Glasgow, and transfer production to the Czech Republic, and fears for the future of Vauxhall’s Luton van plant, which could lose work to Russia or Spain.

Financial Times