Optimism among Britain's manufacturing industry has fallen to a two-and-a-half year low, the Confederation of British Industry (CBI) has warned.
According to the CBI, manufacturing orders and output are expected to fall over the next quarter and sentiment about the general business situation and export prospects fell for the second consecutive quarter.
The quarterly measure of sentiment fell to minus 30 - the lowest since April 2009.
Ian McCafferty, CBI chief economic adviser, said uncertainty eurozone was sapping business confidence.
“Manufacturers saw modest growth in orders and production over the past quarter," he said.
“However, sentiment has deteriorated sharply, and firms expect sizeable falls in activity over the next three months. The quarterly fall in sentiment is the largest since the height of the recession in mid-2009.
“Confidence among manufacturers is no doubt also being sapped by uncertainty over developments in the eurozone, leading to broader concerns over global growth.”
The CBI also said it expected both domestic and export orders to fall significantly (-13% and -14% respectively). The weakest outlook since July 2009.
The news will be a blow to Chancellor George Osborne who is presiding over a shaky economic recovery unemployment levels of 8.1 percent - a 15-year high.