Latest industrial output figures raise fears of UK falling back into recession

The dire economic news will keep pressure on the Government to find ways of boosting growth without compromising its goal of wiping out the huge budget deficit.

The risk of another recession also raises the prospect of even more quantitative easing from the Bank of England.

Manufacturing output rose 0.2 per cent in September, slightly more than analysts had expected, but failing to reverse a 0.3 per cent fall in August.

“Let’s not get carried away ... Surveys are already telling us that output is likely to have fallen in October,” said Brian Hilliard at Societe Generale.

A wider measure of industrial output, which includes utility output and oil and gas extraction, was flat on the month, below forecasts for a 0.1 per cent rise.

Britain’s economy grew 0.5 per cent in the third quarter, and the Office for National Statistics said the industry data would have a negligible downward effect on that figure.

Thinktank NIESR said its latest growth estimate showed the economy had maintained its momentum through October, growing by 0.5 per cent in the rolling three-month comparison.

“It is welcome news that the UK economy has continued to expand. But the UK faces significant headwinds from the euro area’s sovereign debt crisis,” NIESR said in a statement.

Last week, the institute forecast growth of 0.9 per cent this year and just 0.8 per cent next year and said it saw a near 50 per cent chance of a renewed recession in Britain.

The eurozone, which is Britain’s main trading partner, has been hitting the headlines because of its debt crisis.

The US is also experiencing a tepid recovery.