New trains for a key rail route look set to be built in Germany rather than the UK following a government decision that drew the wrath of Labour and trade unions.
Bombardier Transportation, which builds trains in Derby, had been hoping to win the multibillion-pound contract to build and maintain 1,200 carriages for the Thameslink upgrade.
But transport minister Theresa Villiers announced that a consortium led by Germany's Siemens had beaten Bombardier to become preferred bidder for the contract.
Siemens said the move will create 2,000 jobs in the UK. It will also ease overcrowding on the Bedford-to-Brighton, north-south cross-London Thameslink route by bringing in 1,750-passenger electric commuter trains from 2015.
But Labour said this was "a black day" for Bombardier which recently lost out to Hitachi of Japan on another big UK contract for replacement inter-city trains.
The Unite union said the announcement was "a hammer blow for Derby and British manufacturing", while Bombardier said it was "extremely disappointed" it had not been selected.
Subject to the final contract being signed, the carriages will be built at Siemens' plant at Krefeld near Dusseldorf in Germany.
The award to Siemens will mean 300 extra jobs at its factory in Hebburn, Tyne and Wear. And there will be two new maintenance depots built – one at Three Bridges near Crawley in West Sussex and the other at Hornsey in north London.
Villiers stressed that, while she understood Bombardier's disappointment, the Siemens bid had been "the better deal" and would provide passengers with "modern, greener and more reliable trains".
She added: "This is a major step forward for the long-awaited Thameslink programme which will make life better for thousands of commuters.
"This announcement is further proof of the government's commitment to investing in Britain's future. Despite the pressure on budgets resulting from the need to tackle the deficit, we remain fully committed to the Thameslink upgrade which will dramatically improve journeys for commuters and boost the economy."
But shadow transport secretary Maria Eagle said: "The reality is that these new trains will be manufactured abroad.
"The Tory-led government's claim to want to support the British manufacturing that is vital for jobs and growth is exposed today as nothing more than a sham."
Mark Young, regional co-ordinating officer for the Unite union, said: "This news is a hammer blow for Derby and for British manufacturing. The government's decision to award this contract to a consortium which does not have British manufacturing and British job creation as its prime focus is absolutely disgraceful."
TUC deputy general secretary Frances O'Grady said the decision was "a devastating blow for Bombardier and its workforce but also for Derby and the wider UK economy".
Bob Crow, general secretary of transport union the RMT, said the decision was "a massive kick in the teeth for Bombardier and a total betrayal of the workforce in Derby".
The full fleet of trains will be in use by 2018 when up to 24 trains an hour will operate on Thameslink services through central London, reducing the need for passengers to change on to London Underground.
Anthony Smith, chief executive of rail customer watchdog Passenger Focus, said passengers would welcome the announcement of new carriages. And the Association of Train Operating Companies said the new carriages would ease overcrowding both in London and outside the capital.
Gerry Doherty, leader of the TSSA rail union, said: "While this is good news for Siemens employees and suppliers in the UK, there is no disguising the fact that it is a body blow to train making in the UK, particularly for Bombardier staff in Derby.
"It is really make your mind up time for ministers if they are serious about keeping train making alive in the UK. Germany and France support their own rail industry through their manufacturing base. It is high time we did the same."