Why the outlook for Britain is truly dreadful

The news keeps getting worse. Manufacturing heading for recession; housing market nose-diving, high street sales plummeting; it's going to be very painful.

The news "just goes on getting worse", said Michael Saunders of Citigroup. The Purchasing Managers' Index of manufacturing activity for June was "truly dreadful". It dropped to a five-year low of 45.8, well below the 50 mark that separates expansion from contraction. Despite the low pound, manufacturing is "heading into recession".

However, the sub-index measuring input and output prices hit highs not seen since the data series began a decade ago as manufacturers sought to pass on their high costs, further highlighting how the Bank of England is caught between slowing growth and inflationary pressure. Meanwhile, business confidence has tumbled to a 16-year low, according to BDO Stoy Hayward.

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