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BRITISH manufacturing could get an £800m shot in the arm if engineering giant GKN buys Volvo’s aircraft business.

UK-based GKN, which has bases in Portsmouth and the Isle of Wight, is widely tipped to be the frontrunner for the acquisition after Germany’s leading engine maker, MTU Aero Engines, dropped out of the auction process started by Volvo in November.

The swoop by GKN, which employs 40,000 people, would represent one of the biggest acquisitions by a British manufacturing firm since the banking crisis.

The Volvo business makes the RM12 engine for Saab’s Gripen fighter jets, as well as supplying engine components to the three main engine manufacturers, including Rolls-Royce.