The announcement by Swedish telecoms group Ericsson that it is to axe its Coventry R&D centre with the loss of some 700 jobs has shocked the industry.

The surprise withdrawal is part of Ericsson's efforts to cut nearly £900 million in costs following the downturn and a fall in revenues and profits.

However, Professor David Bailey, an economics expert Coventry University's Business School, said that after investing in the site, it's strange that they have decided to uproot now:

"Ericsson has been in Coventry for four years since it acquired the bulk of Marconi whose roots can be traced back to GEC and was ruined through a series of takeovers at the height of the dot.com bubble.

"Ericsson is shifting its work abroad because costs are lower and although they have blamed poor results on a slowdown in emerging markets it is still a devastating blow to the 4,000 people Ericsson employs in the UK including the 700 at Coventry's Ansty Park site.

"Ansty Park was meant to be all about providing a site for high-tech foreign investors, but with Ericsson pulling out and Tata postponing plans for a Research &Development centre; that plan currently looks as empty as the Ansty site itself."

Professor Bailey is concerned that the UK is not putting enough effort into developing home-grown innovative talent and that we are relying too much on big multinational firms for investment, which is difficult to attract in the current economic downturn.

Professor Bailey added: "UK plc can no longer compete in metal bashing and low level assembly work so our future definitely needs to be in high-tech, research intensive activities. If we can't compete in R&D activities, where does that leave us?

"We need a new industrial policy that not only backs the technologies of the future, but provides long-term finance for firms so that we can grow British- based winners.  We also need to make takeovers more difficult so that firms spend less time on trying to grow through takeover and more time on growing the business organically.

"Monitoring firms' activities should be a key part of that policy so that moves like Ericsson's don't come as a bolt from the blue for the city, region or national government. Slowing such processes down and giving everyone involved time to adjust and move on was a key lesson from the MG Rover closure, as our research showed last year."