Poor performance results from Britain’s manufacturers are putting the Bank of England under heavy pressure to make further cuts in interest rates.
Drop in domestic orders, collapse of investment plans and job losses have posed serious threat to survival of British manufacturing, said the industry organisation EEF.
The EEF survey reveals biggest fall in factory outputs in the last quarter and severe drop in orders, goods prices and margins.
The manufacturing group, finding Monetary Policy Committee’s 1.5 point cut last month inadequate is asking for further one percentage point cut in the interest rate.
According to EEF’s chief economist Steve Radley, it is essential to put every possible lever including fiscal stimulus and adequate cuts in interest rates and persuading banks for lending more money to business.
The auto industry is the worst affected sector reporting 37% fall in output. Representatives across the industry held an emergency meeting with the Business Secretary Lord Mandelson and sought government support in the face of crippling economic conditions and falling demand.
Radley warned that if corrective steps were delayed, smaller companies would be forced to put down shutters.
As per EEF survey after 21 months’ standstill in the black, output balance slipped to minus 11% and order balance to minus 15%. The plunge in domestic order balance is 26% minus, while the export balance slid from plus 18% to minus 10.
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