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Fears of a double-dip recession resurfaced today after factory output unexpectedly fell early this year, hitting the pound again.
Official figures showed output from British factories fell 0.9% in January in a stark warning that manufacturers are struggling to shake off the slump.
The decline — the first for five months — reversed December's 0.9% gain and surprised the City which was expecting another modest rise.
It stoked fears that the economy could shrink again in the first quarter of the year having edged out of recession at the end of 2009 with growth of 0.3%.
David Tinsley, an economist at National Australia Bank, said: “It's possible UK gross domestic product will be weak or a bit negative in the first quarter.”
Sterling slid again on the news, down 1.05 cents against the dollar to $1.4892 and 0.58 cents against the euro to €1.0968.
Analysts said snow and ice hindered production during January but were only partly to blame.
“It is impossible to blame everything on the weather,” said Philip Shaw, an economist at Investec. “The figures are very disappointing.”
Overseas demand for British goods has failed to pick up despite the weakness of the pound. Dismal figures yesterday showed exports collapsed in January.
The latest blow to the Britain's economic prospects came as Gordon Brown warned that the recovery “is still in its early stages and remains very fragile”.
The Prime Minister said: “It's pretty obvious what's happening. The European economy which is our major source of growth is not growing fast enough.”
The fall in factory output was felt mostly by manufacturers of electrical goods, chemicals and man-made fibres. It meant overall industrial production, which includes mining and utilities, fell by 0.4% in January.
Reader views (9)
If Britain had of joined the Euro in the first place this would of been Europe's problem not just "little England", and don't mention Greece they lied and hid there finances from the ECB which finally caught up with them, but because they are in the Euro, the European Union will help them out, unlike us, we always do it wrong, and they blame everyone else just bad Government useless.
- Fred, London, 11/03/2010 07:47
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“It's pretty obvious what's happening. The European economy which is our major source of growth is not growing fast enough.” So obviously it's not our major
source of growth!
Perhaps we could try trading freely with
the rest of the world(eg China) - oh, sorry I forgot,
the EU dictatorship wont let of course.
- Lb, Bromley, 10/03/2010 23:11
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Europe is not growning fast enough , what a joke.
We are the last country to come out of recession and lets blame Europe. Labour stands for the working class. U.K has gone from a world class Country to a country that is sinking fast. We are loosing our say in this world. Its becoming obvious U.K is moving down the ladder of world top economies.
Unless we tighten up and have a radicle change of policy I think UK will most defenitely end up at the bottom.
Our banking system is almost gone. No manufacturing .
What do we manufacture . Zilch!!!. What are we waiting for in an upturn. Bigger Banks (but we are hindering them from making progress. Factories ? The only industry making money for the UK is Tesco and the supermarkets ,paying their staff minimum wages (who in turn pay minimum tax).
- Sam, london, 10/03/2010 21:15
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look it is all very simple: yesterday the west live very well when the east was poor. The scales one up and one down. Now east very rich and the scales back to level, or maybe even east scales higher. Then west has to give up luxuries: no more 2 holidays a year, no more 2 cars, no more free education, no more grand mother can live till 100, just no more no more OK. But if you share your luck before with the east, then maybe the east can help you now. But you greedy before, you take from the east without permission, then you laugh at them. now the east wait till you ready to eat your grandad before they start to help you. Understand very simpless.
- Telford Change, london, 10/03/2010 16:44
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The pound devalued by 30% [as usual under a Labour government]Exports hardly increased.
What a massive price WE have had to pay for very little or no return.
But all's well captain McRuin says so!
What a genius.
]
- Dan.S La Merde, brittany fr, 10/03/2010 16:38
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"The Prime Minister said: “It's pretty obvious what's happening. The European economy which is our major source of growth is not growing fast enough.”"
Ah, so now it's Europe's fault.
- Jeff Hyman, Pegeia, Cyprus, 10/03/2010 16:16
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Factory output ? I wasn't aware that there were any left in the 'Workshop of the World'...........
- Andy Woodhead, London, ENGLAND, 10/03/2010 15:58
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First we abolish by neglect all manufacturing industry, and then become obsessed with trading with Europe following the disastrous decision to join the EU, at the expense of all our old lucrative export markets in places, for example, like Thailand, Malaysia, Australia, and New Zealand.
The reliance on trading with Europe hasn't produced the results the Europhiles brazenly promised. I gather that we have run a trading deficit with Europe since joining the EU? If anyone can refute this please let it be known.
- Jon Kent, Hertford. UK, 10/03/2010 15:06
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Double dip? Certainly. This is a depression not a recession. You can't see it yet as insufficient time has passed since the start.
- Abominable Snow Man, London, 10/03/2010 14:41
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