HUNDREDS of Hampshire workers whose futures rely on contracts to manufacture parts for the Eurofighter Typhoon jet are anxiously waiting to find out if the remainder of the project is to be axed.

The Treasury and the Ministry of Defence (MoD) were reportedly last night locked in discussions over the cost implications of stopping the latest order as part of a swathe of public spending cuts.

Pulling out of Britain’s commitment to buy a third batch of the aircraft could cost as much as £2 billion in fines and compensation, it is estimated.

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It could also throw into doubt the jobs of hundreds of defence sector workers in the county who design and build parts for the cutting-edge fighter plane, each of which is estimated to cost £89m.

Defence giant BAE, which is based in Hampshire and employs more than 2,500 people here, is one of four partner firms on the project, while aviation specialists Smiths, which employs more than 1,000 people at plants in Hamble and Eastleigh, is a major contractor.

Another major regional defence employer, Cobham, has more than £800,000 of equipment on every plane.

In total, more than 40,000 UK jobs rely on the Eurofighter project and the Government is likely to face claims from industry, which are expected to run into hundreds of millions of pounds, as well as widespread job cuts, if it moves to cancel its agreement.

The Treasury and the MoD are reportedly wrangling over the cost of meeting Britain’s commitment to buy 40 aircraft in the first part of the third tranche, which ultimately totals 88 aircraft.

A plan to sell 24 of the aircraft to Saudi Arabia still leaves the treasury with a commitment to buy 16 Typhoons and a £1 billion bill at a time when it is struggling to cut costs. The MoD is keen to secure the aircraft but is also anxious to maintain funding for two aircraft carriers, which are also supporting hundreds of jobs in Hampshire.

The other nations involved in the project – Germany, Spain and Italy – have committed to buying their share and would expect to be compensated for extra costs if Britain withdraws from the third production run.

Currently, a memorandum of understanding sets the ceiling for compensation and fines at £2 billion.

An MoD spokesman said talks with partner nations over the future of the programme were continuing.

He said: “Ministers of the Eurofighter Typhoon Partner Nations met on April 2 to discuss the arrangements for the procurement of tranche 3 aircraft.

“Good progress was made, however, further discussion will be required before all nations are able to make an announcement on the way ahead for tranche 3.

“We will continue to engage with our Partner Nations to agree the way forward.

Given the ongoing discussions, it would be inappropriate to comment any further on the specific detail at this stage.”