Woes grow for small factories

Optimism about export prospects is continuing to fall

Smaller manufacturers are under "extreme pressure", the Confederation of British Industry has said in the latest survey showing how the global economic slowdown is hitting Britain.

Output among small and medium sized manufacturers fell in the four months to July at its fastest rate since October 1999, the report said.

And amongst the smallest manufacturers, confidence over future exports hit its lowest ebb for almost three years.

Overall, 43% of firms surveyed were less optimistic about business conditions in July, and only 15% more upbeat.

But the balance of confidence was, at -28%, slightly less than the -30% figure reported in the last survey, in April, at the height of the crisis surrounding the outbreak of foot-and-mouth in UK livestock.

Simon Bartley, vice chairman of the CBI's small and medium sized firms (SMEs) council, said: "SME manufacturers are facing extreme pressure from the global slowdown.

"They continue to experience falling orders whether they are suppliers to larger UK manufacturers or directly to US or international companies."

While the latest cut in UK interest rates offers some hope of stemming declines in confidence, smaller manufacturers will be reliant on global; factors for an improvement in business conditions.

The survey, while illustrating the pressure SMEs face, will come as little surprise a week after official data confirmed Britain had entered recession.