LONDON (AP) -- Optimism in Britain's manufacturing sector has slid to a near 30-year low despite the falling pound, while the car industry continues to suffer amid plummeting demand, business leaders said Thursday.
In its quarterly assessment of the manufacturing sector, the Confederation of British Industry found that 70 percent of companies are less optimistic than three months ago, while just 6 percent are more positive. The ensuing negative balance of 64 percent was the lowest since July 1980, when Britain was mired in an extremely deep recession.
The business lobby group said demand for manufacturing goods has fallen sharply in the last three months with more businesses reporting a drop than at any time since July 1991.
The CBI said the outlook for the next three months is grim despite the big falls seen in the pound, particularly against the dollar and the euro. A falling currency should make exports cheaper but the faltering U.S. and European economies are more than offsetting that boon to prospects.
"Most firms expect conditions to get even worse, with further falls in orders expected, leading to more job cuts," said Ian McCafferty, the CBI's chief economic adviser. The CBI forecast that almost 50,000 manufacturing jobs were lost in the fourth quarter of 2008 and 60,000 could be lost in the first quarter of 2009.
Meanwhile, the Society of Motor Manufacturers and Traders, or SMMT, also released figures that showed vehicle production in Britain slumped by nearly half in December from the same month the year before as the credit crisis continued to hit demand hard.
The trade group said nearly 48 percent fewer cars were made in December 2008 compared with the previous year, meaning that in 2008 as a whole car production dropped by almost six percent.
The society said it is in talks with the British government about how the industry can deal with the financial crisis, which has massively reduced the amount of credit available both to consumers and the car manufacturers.
The woes afflicting the British car industry are echoed around the world, particularly in the U.S., where sales plunged 18 percent in 2008. Facing the prospect of a possible bankruptcy of either General Motors Corp. or Chrysler LLC, the Bush administration provided $17.4 billion in short-term loans to shore up their finances ahead of major restructuring.