Confidence among manufacturers has seen its sharpest fall for almost three decades during the last three months of "exceptional economic turbulence," the CBI has warned.
In a report highlighting the present difficulties – the UK manufacturing industry output falling to its lowest rate in 28 years – the CBI's chief economic adviser, Ian McCafferty, called for further cuts to interest rates. The Industrial Trends Survey conducted by the CBI revealed the balance of manufacturers reporting a fall in new orders in the last three months stood at minus 30% - the biggest quarterly fall in total new orders since January 1999.
The Industrial Trends Survey was conducted between September 25 and October 8 and 515 manufacturing firms took part in the survey.
A balance of minus 38% of firms reported falling domestic orders, the sharpest fall since January 1992. Export orders, which were supported by the depreciation of sterling during the previous survey period, also deteriorated on global economic slowdown.
McCafferty said: "This survey was conducted during a period of exceptional economic turbulence, so it is unsurprising confidence has taken such a hit. However, the sharp falls in orders and output show that the slowdown in the UK economy is now spreading to sectors previously resilient to the weakness in the banking and housing markets.
"It is also of serious concern that constraints on capital now appear to be affecting manufacturers, in a way that had not been the case earlier.
"We can but hope the recapitalisation of banks and the cut in interest rates, which took place just as the survey closed, will prevent a further credit squeeze over the winter."
