Construction and engineering are seen as key strategic industry’s where government action could have a real and early impact.

“As the credit crunch showed there are huge risks to taking a complacent, hands-off approach,” he will argue in a speech later today at Imperial College.

Cable said tunnelling in particular was a British sector that needed to be developed ahead of the expected work boom in transport and water and energy projects.

He said: “In the past a lot of public procurement has not been very strategic, we have been a bit too defensive about the European Union rules.

“We don’t want to become protectionist and nationalist in the way we buy things, but we think we could do a lot more to promote British business through procurement.

He added: “We could learn from countries like German that are more strategic about supporting their business.

“The railway sector is one where we had a very careful look at way procurement system operated, and the way the contracts are framed are much more strategic.

“Tunnelling will be a big activity because of all the projects that are now going ahead. We need to think ahead about how we prepare the training work and the subcontracting to make sure as much as possible goes to British business.”

The decline in UK expertise was highlighted in the Crossrail main tunnel drive awards where Spanish and German firms have won key jobs.

Cable will also launch plans for a Government-backed bank to increase lending to businesses as he sets out a long-term industrial strategy today designed to give companies the confidence to invest.

It is hoped the new financial institution will lift the block on growth caused by the shortage of finance for firms that want to expand.

He will also announce the extension of the Employer Ownership Pilot scheme today, which gives businesses access to £250m funding for vocational training.