European customers are "abandoning" UK firms, according to a manufacturers' organisation.

Make UK - formerly known as the EEF - said export and domestic orders were continuing to fall to the extent UK manufacturing output was now only forecast to grow by 0.2% this year.

Its argument was supported when separate, closely-watched activity figures showed new export orders at their lowest level since October 2014.

The Markit/CIPS purchasing managers' index for the manufacturing sector as a whole showed its lowest reading since the month after the Brexit vote in 2016.

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It came in at 49.4 for May. Any figure below 50 represents a contraction.


While Make UK blamed Brexit for the sector's woes, the other PMIs released on Monday showed struggles globally.

Contractions were reported too for Japan, South Korea, Malaysia and Taiwan.

The Euro area's reading was 47.7 - well below that of the UK - while China's showed only a small rate of growth as the effects of its trade war with the United States hits demand globally.

As the Tory leadership contest gets under way ahead of the current Brexit deadline of Halloween, Make UK said its members feared the potential impact of 'no deal' "economic lunacy".

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Make UK's research, based on a survey of 350 firms, suggested investment plans were "paralysed" by Brexit uncertainty in the second quarter of the year.

Factories had earlier been boosted by what it called "artificial" stockpiling in the run-up to the original Brexit deadline of 29 March.

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Make UK's chief executive Stephen Phipson warned elements of the manufacturing industry would be pushed over the edge if the uncertainty continued.

He said: "Earlier this year there was clear evidence that industry was on steroids as companies stockpiled.

"Underneath, however, there is now growing evidence of European companies abandoning UK supply chains, whilst Asian customers baulk at the unknown of what may exist as the UK leaves trade agreements which operate under EU rules.

"With this picture it would be the height of economic lunacy to take the UK out of the EU with no deal in place. The race to the bottom in the interests of party ideology has to stop otherwise there will be a heavy price to pay."