Britain's car industry, which contracted sharply during the recession, was boosted on Wednesday by a £2 billion investment in suppliers by the Tata Motors-owned Jaguar Land Rover.
The contracts for the Range Rover Evoque, hailed by business secretary Vince Cable, will create hundreds of jobs and expand the UK supply chain by more than a quarter.
Cable said the news proved manufacturing was in robust health and able to compete with the rest of the world. ''[It] shows that the UK automotive supply chain is capable of winning major contracts and creating vital jobs in the UK,'' he said on a visit to the JLR plant on Merseyside that will build the vehicle.
He credited ''selective support'' by the government, workers' flexibility and the cheap pound for the resurgence in car manufacturing.
The Labour government provided JLR with £26 million for the project. As recently as a year ago the future of one its three British plants was under question.
When Tata Motors bought JLR in 2008 just before the downturn, it was widely considered a bad investment decision. However, Tata rejected a humiliating handout and managed to turn the venture around without government help.