UK manufacturing is in a "critical condition" and its problems are spreading to the service sector, according to the new quarterly survey from the British Chambers of Commerce.

The survey, covering 7,385 companies, mostly conducted before the September 11 attacks in America, also found prospects for manufacturers are set to deteriorate over the next three months. The BCC also called on the government for targeted aid to those firms and regions worst hit.

"Manufacturing needs some intensive care, and while the Bank of England's recent cuts in interest rates offered the right kind of medicine, it may not yet be enough to bring the sector back to health," said the BCC's director general David Lennan.

Forum Response: Institute of Directors

Ruth Lea, Head of the Policy Unit at the Institute of Directors, told ePolitix.com: "There can be little doubt the manufacturing industry continues to under-perform the general economy. A recent IoD business opinion survey had shown a partial recovery in optimism with output growth balances comfortably positive. However, total and export orders have once again slumped, which bodes ill for manufacturing in the near term."

"We remain concerned about the downside risks to the British economy in general. The USA's slide into recession and the downgrading of Euroland's growth prospects since the beginning of the year is very disquieting. Germany's near term prospects are especially worrying. And the economic performance of the Far East, in general, and Japan, in particular, is disappointing. In addition to the deteriorating international environment, nervous equity markets and the cumulative knock-on effects of the September 11th attacks and the foot and mouth epidemic can only continue to damage confidence and economic activity."

Forum Response: Construction Products Association

Allan Wilén, Economics Director of the Construction Products Association told ePolitix.com: "The critical condition of UK manufacturing and signs of weakening in service sector growth are echoed in the construction industry. The Association's latest Market Trends, published this week, indicate that private sector construction growth is losing momentum; new orders received by manufacturers fell sharply in August and the general housing market will cool over the coming months."

"In addition, the association's latest monthly survey has recorded a dramatic deterioration in industry confidence during September, with new order levels running below the levels of a year ago."

"Although recent interest rate cuts have been welcomed, further cuts may be required over the coming months to rebuild confidence. Of vital importance, however, is the Government's resolve to press ahead with planned increases in public sector investment in schools, hospitals, social housing and transport."

Forum Response: Chartered Institute of Purchasing and Supply

A spokeswoman for the Chartered Institute of Purchasing and Supply told ePolitix.com: "The CIPS produces three economic indicator reports on a monthly basis, including one on the manufacturing sector."

"What we have seen for the past seven months is that the manufacturing sector has been in a state of contraction, i.e. recession. Our indicators support those of the CBI but also show that manufacturers as a whole have striven to reduce costs and their headcount to increase productivity. They have pared down their inventories and attempted to make full use of the strength of the pound in order to keep cash flow going."

"They can't do any more - they have purchased effectively, reduced prices and costs and that is why we have been consistently been calling for further interest rate cuts in order to boost the sector."