workers in the UK will pay the price for the strong pound with significant job losses over the next 12 months, according to a report.

The high value of the pound against foreign currencies has driven down export orders to UK companies, and in some areas overseas orders are at their lowest level for 14 years.

Some sectors, particularly engineering, are already laying off staff and there could be thousands more job cuts yet to come.

The bleak outlook for UK industry is contained in a report by global business information company Experian.

Its Corporate Health Check warns that previous steady growth in company profits hit the buffers at the end of 1997.

Worst hit by the downturn is the engineering industry. The report says that 3% of engineering workers, or up to 50,000 people, could lose their jobs as companies trim back costs to meet competition from cheaper overseas rivals.

The English Midlands, heartland of Britain's engineering industry, are worst hit and likely to bear the brunt of a recession.

''Export levels at companies in the West Midlands hit their lowest level for 14 years during the fourth quarter of 1997, with export sales and orders down by 50% on a year earlier,'' Experian reports.

Also badly hit are Wales and the South-west of England, where company profitability has fallen to its lowest level since 1995.

Scotland, the South-east and far North of England and East Anglia have so far bucked the trend, with businesses still showing increasing profits.

But Peter Brooker, associate director at Experian, said it was likely that these areas would also feel the effects of the downturn.

Mr Brooker added: ''There is now a real possibility the manufacturing sector could move into recession in the first half of 1998.''

The slowing down in business profits comes after three years of consistent growth and is being blamed firmly on the high value of sterling.

The pound has been driven upwards against other currencies by higher UK interest rates and by the prospect of the euro becoming the single currency of mainland Europe.

Most observers now believe that UK interest rates have peaked and the pound has weakened slightly, but Mr Brooker said the fall was unlikely to have an effect on company profitability for at least 12 months, which would be too late for many.