Economists said further reductions in the cost of borrowing are likely during the next few months after new figures suggesting that growth remains weak.
A regional survey of manufacturing by the Confederation of British Industry and the consultancy Business Strategies showed that output was sluggish in seven out of 11 regions of the UK. Stocks of finished goods either fell or rose more slowly in all but three regions, while new orders slowed or fell in five regions. Demand at the national level was flat during the past four months, for the first time since October 1993.
Weaker export orders in Yorkshire and Humberside, East Anglia and the North contributed to the overall fall in orders. Output was weakest in the same three areas and the South-east.
Margaret Beckett, the shadow trade and industry minister, said: "It is particularly worrying that the slowdown is as widespread as it is harmful."
Separate figures yesterday showed that the longer leading indicator of the economy declined last month. It has been falling steadily since June 1994. The shorter leading index has risen slightly since November to a level about the same as a year ago.
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