CBI Foretells Of Jobs Nightmare In Manufacturing

Things look rather bleak for the manufacturing industry. A recent survey predicts an awful downturn that could endanger jobs numbering in the tens of thousands. The report from the Conferderation of British Industry claims that this is the worst outlook for manufacturing seen since 1980.

The news comes right on the heels of Tory Chancellor Kenneth Clarke's bleak announcement that more companies are expected to drastically increase the rate of cuts. The trend is expected to hit with full force after Christmas as the companies ready themselves for a long recession. He also stated that past reports from the Bank of England weren't realistic in predicting that the downturn will flatten out after a rough first half next year.

The stock market showed the aftermath of these announcements with a flurry of selling. The FTSE 100 suffered a loss of 5% to close out at 4005.68.

The housing market isn't much better. The latest reports from America show that construction is down to a record low as of last month. Fears of future deflation were also stirred up with reports of the biggest cost of living decrease since 1947, the year when the measurements started.

The Bank of England is making further attempts to lessen the impact of the collapse. Another 2% has been dropped from rates over the past two months in an effort to aid ailing consumers. Statements from the Bank showed that another 2% cut was initially considered before the 1.5% cut was agreed upon at the previous meeting. Some view this as a sign that interest rates may go to 2% after the next meeting on December 4th. It's isn't all speculation either. Sir John Gieve, the Bank's deputy governor, stated that more cuts might be required.

These measures are likely a sign of the times. The Bank had help out some hope that industry would step up and pick up a bit of the slack produced by the rapid decline of consumer spending. This doesn't seem likely though. Demand is falling across the world. Exporters have therefore not received the expected benefits from the pound's 20% decline. The CBI has already stated that 44% of exporters have sold below normal levels and that their warehouse are already filling up.

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