It’s official – the downturn in the British manufacturing sector has become a recession.

According to figures released yesterday by the Office for National Statistics, second-quarter manufacturing output dropped 1.3% year-on-year and 2% compared to Q1.

Following the output fall in Q1, manufacturing has declined for two successive quarters, the formal definition of a recession. Last week, the Bank of England cut interest rates by 0.25% to try to boost the sector.

Manufacturers have suffered both from global economic difficulties and the high level of the pound. “This is technical confirmation of what has been apparent to business for some time,” commented Ian Fletcher, chief economist at the British Chamber of Commerce. “Our manufacturers are caught between a rock and a hard place, with the pain of the global slowdown, accentuated by an uncompetitive euro exchange rate.”

The British economy as a whole – of which manufacturing comprises only 20% – has not yet succumbed to the dreaded ‘r’ word, largely due to the continued strength of the service sector. However, there are fears that the decline in manufacturing will hit consumer confidence and spending.

News source: BBC Online Business News (UK)