Recession is spreading, with manufacturers in every region reporting declining orders in the four months to July and expecting the trend to continue.
Between a half and two thirds of firms are operating below capacity, according to the latest CBI/Business Strategies survey of manufacturing.
Declining export orders are no longer being offset by the strength of domestic demand, which has started to decline too.
Predictably, firms have become much more pessimistic; only in Northern Ireland has optimism increased. Plans for investment in plant and machinery have been revised downwards substantially in most regions.
Meanwhile, acquisition and merger activity continues at a high level. UK companies spent £11.7bn buying other UK firms in the second quarter of this year, up from £4.9bn, though over half the higher figure was due to Commercial Union’s acquisition of General Accident. Other transactions included Siebe buying Eurotherm and British Aerospace’s purchase of Siemens Plessey Systems.
Companies were slightly less active in buying overseas firms than previously. A key transaction was GEC’s £833m acquisition of Tracor.