CBI survey highlights firms' gloomy outlook

Manufacturers reported the biggest drop in confidence for more than two years yesterday as the eurozone crisis weakens demand.

The CBI Industrial Trends Survey showed that manufacturers' expectations for exports and the general business situation fell at its sharpest rate since the height of the recession in April 2009.

Orders and output are expected to fall over the next quarter, following modest rises in domestic demand and production, with exports expected to show their first fall since October 2009. The survey adds to worries that the economy is grinding to a halt and it deals a blow to the Chancellor's plans to rebalance the economy towards more exports.

Manufacturers now expect to shed jobs, having increased employment over the last quarter.