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'Worst collapse in UK manufacturing in four decades
By Edmund Conway
Last Updated: 7:45PM GMT 10 Mar 2009

The "horrendous" scale of Britain’s industrial recession has been laid bare by figures showing that manufacturing output is declining at the fastest rate since records began more than 40 years ago.
In figures labelled by analysts as "shocking" and "a horror show", Britain’s industrial production dived at record speed, underlining how hard the global downturn has hit producers and exporters. The statistics are doubly surprising because many economists had expected the weakness of the pound over the past year to have boosted their fortunes.
Manufacturing output dropped by 2.9pc in January alone - well below City forecasts, and taking the annual rate of decline to 12.8pc - the biggest since January 1981, according to the Office for National Statistics.
Underlining how much of that has come since November, the quarter-on-quarter contraction was 6.4pc - the most severe since comparable records began in 1968.
The broader industrial production total, which also includes mining and utilities, is also now falling at an annual rate of 11.4pc - again the worst since 1981.
The slide in Britain’s industrial production is mirrored elsewhere throughout the world. A sudden freeze in export markets in November has meant that although most attention is still focused on financial markets and the banking system, manufacturers and exporters are proving the biggest victims of the global recession.
According to Ross Walker, UK economist at Royal Bank of Scotland, the industrial production figures would have been even worse had it not been for a cold period which boosted output from power stations and gas plants.
"Manufacturing output contracted at a record pace - these data stretch back to 1968, aptly, a year of major social and economics upheaval," he said. "The UK data also serve to emphasise the severe and highly synchronised collapse in industrial output globally (other figures published today showed industrial production slumping by 3.1pc in France and 2.5pc in Sweden in January). Industrial capacity is being eliminated at an unprecedented pace, with few signs of any imminent alleviation."
David Kern, chief economist at the British Chambers of Commerce (BCC),
said: "The much worse than expected manufacturing figures show that the sector has so far failed to benefit from the sharp falls in sterling.
Clearly, the essential rebalancing of the UK economy towards industry is not yet taking place.
"The critical priority is to ensure that the vital skills base within manufacturing is not lost during this recession. Urgent measures are needed to help viable and well managed firms hold on to their trained and skilled employees. A loss of this precious resource will cause immense long-term damage to the economy."
Peter Dixon of Commerzbank said the figures represented an "industrial output horror show".
He added: "Even assuming that industrial output remains flat in February and March (a heroic assumption if ever there was one), the industrial sector will subtract 0.8 percentage points off first quarter gross domestic product growth in what is now the biggest collapse in this sector in almost 30 years."'