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Europe faces a serious threat to its highly successful chemical industry and must combat it with a common research and development policy for chemistry and chemical engineering, according to a report published yesterday.

An alliance of five of Europe's leading chemical bodies, including the Royal Society of Chemistry, warns of a growing trend by many chemical industries to move their business bases to competitor countries including North America and Japan. The likely emergence of China and India as economic giants in the next century will increase the pressure on the industry in Europe.

The alliance's recommendations include strengthening relevant university research through better funding. It also wants national and European funding strategies to be put in place for costly equipment needed for areas such as neutron diffraction and synchrotron radiation. Some countries should adjust their taxation policy to release additional funds for university-industry collaboration. The European Commission is urged to establish more programmes to encourage the movement across the Union of scientists carrying out research and those being trained in chemistry.

John McCleverty, professor of inorganic chemistry at Bristol University, says that the European chemical industry contributes Ecu30 billion (Pounds 23 billion) to Europe's trade balance and employs 1.65 million people. Many sectors including agriculture and the car industry depend heavily on it. Professor McCleverty, chairman of the European research councils' chemistry committees, one of the alliance members, said: "Industry is reliant on universities for its workforce so we must ensure that academic institutions are properly funded."

* Trevor Jones, director general of the Association of the British Pharmaceutical Industry, has warned that the well-being of the pharmaceutical industry is under threat because of an "erosion" of science base. "In my frequent visits to universities in this country, the decline in the fabric of the laboratories, the lack of state-of-the-art analytical equipment for teaching and research and the growing disillusionment of many academics are all too evident," he said.