The British economy is showing the greatest signs of stress since the eurozone crisis and fears of a double-dip recession six years ago, as worrying reports show the steepest fall in manufacturing output and the greatest degrees of pessimism among employers since 2012.

Concerns over Brexit and a slowdown for high street spending are among the major factors contributing towards 2018 being the worst time in six years for British firms planning to take on new staff, according to a closely watched survey compiled by the recruitment firm ManpowerGroup.

UK manufacturing has largest monthly fall in output for five years Read more

Watched by the Bank of England and the government for early warnings of hiring spurts or downturns, the quarterly poll of about 2,000 major employers from nine different industry sectors across the UK found a net balance of only 4% planning to hire more staff rather than cutting back.

The weakest outlook from the survey was reserved for the banking and finance industry, which recorded the worst outlook since the depths of the financial crisis almost a decade ago, suggesting job cuts may be on the way over the summer.

The barometer of hiring sentiment comes as Britain’s factories unexpectedly recorded the sharpest drop in output for more than five years in April, amid falling demand for steel and electrical machinery.



Pointing to fewer orders for steel used in infrastructure projects and a wider slowdown in demand for British goods at home and abroad, the Office for National Statistics said manufacturing output fell by 1.4% in April from the previous month. Economists had forecast modest growth of 0.3%.



The figures are likely to stoke concerns the UK economy is reaching its lowest ebb since the Greek debt crisis of 2012, a year when George Osborne was booed at the London 2012 Paralympics as the coalition government pushed through austerity measures with damaging consequences for living standards.

Official figures showed Britain fell into a double-dip recession in the first months of that year, although the downturn was later revised away to show growth was flat in hindsight.

Although the situation does not appear to be as severe this year, forecasts issued by the National Institute of Economic and Social Research on Monday suggest the UK has done little to bounce back from heavy snowfall earlier in 2018, when the ”beast from the east” caused a sharp drop in output.

Putting the growth rate for GDP at only 0.2% in the three-month period to May, up from 0.1% in the same period ending in April, Niesr’s head of UK macroeconomic forecasting, Amit Kara, said: “Economic growth has slowed materially since the start of this year and it continues to remain weak.”

According to the ONS, overall industrial output in April – which includes the figures for manufacturing, alongside the utilities and mining industries – dropped by 0.8% compared with the previous month, led by the fall in factory production and similar declines for energy supply and water usage.

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Ministers are likely to be worried by the picture the figures paint for the state of the British industrial sector, with the steel industry facing mounting pressure from US import tariffs. Industry insiders fear the tariffs could rekindle the crisis of two years ago, when a glut of Chinese imports threatened to bankrupt British producers.

The figures could also make it harder for the Bank of England to raise interest rates from as early as August, although observers point out that factories account for only around 10% of the economy.

They also show the UK’s trade position with the rest of the world deteriorated further in April. Britain’s trade in goods deficit, which is the difference between products sold abroad and imported to the UK, unexpectedly widened by about £2bn to reach £14bn – the biggest monthly gap since September 2016.