The Bank of England’s hope that export sales would pull the UK economy out of recession appear getting dashed with manufacturing downturn continuing unabated and export sales going from bad to worse.

The rate of fall in industrial output and employment is unprecedented, according to latest data from the Chartered Institute of Purchasing and Supply (Cips). Domestic orders as well as overseas sales are collapsing in spite of weak pound. The UK exports are finding it difficult to compete in the shrinking overseas markets.

According to Cips director, Roy Ayliffe, the UK manufacturing sector has started degenerating as the rate at which it is contracting is reminiscent of conditions that prevailed in 1980s.

The grim figures of survey would further add to pressure on the Bank of England to make cuts in interest rates again despite these being at an all-time low of 1%. Experts are predicting that Bank’s Monetary Committee may decide to cut down rate to 0.5% and inject more money into the economy.

The Bank has very few options before it. Despite allowing sharp fall in Sterling to boost exports and take economy out of recession, there is big stagnation particularly in the UK car industry which is heavily export-oriented.

The rate of production declined is 12% and the contraction in employment is 30,000 jobs per month, while manufacturing’s lobby group is forecasting 140,000 redundancies in 2009.