the West Midlands manufacturing industry has been harder hit than in any other part of the UK as the financial crisis infected the real economy this autumn.

The latest quarterly survey of manufacturing by the EEF and Grant Thornton attributes the region’s woes to crumbling demand for motor vehicles.

The outcome is that West Midlands industrialists telling the survey they have cut back their output in the past three months outnumbered those reporting an increase by 30 per cent.

That compared with an adverse balance of minus11 per cent across Great Britain, itself down sharply from plus15 per cent in the previous survey.

“What marks this downturn out from others is the alarming rate at which conditions have deteriorated through the autumn due to the problems in the financial markets,” said Steve Radley, the EEF’s chief economist.

“It is now imperative that the Government and the Bank of England continue to pull on every lever at their disposal.”

The EEF is calling on the Bank to cut interest rates by a full point this week, while forecasting that manufacturing output will fall by five per cent in 2009.

That would be the worse setback since the depth of the last recession in 1990, said Mr Radley’s colleague Lee Hopley.

West Midlands industry looks set to lose more jobs than any other part of the country; 58 per cent of the region’s manufacturers said they expect to cut jobs in the coming three months. Only seven per cent plan to recruit new staff.

Ms Hopley said: “Our members are trying to hold on to skilled workers where they can because of the difficulty getting them. But job losses are expected to accelerate now across the country.”

The abrupt turn for the worse for industry in the past three months arises from a sharp decline in export orders.

Three months ago exporters were riding high on the fall in the value of the pound. A positive balance of 18 per cent said their export orders were increasing. That has now been replaced by a negative balance of minus ten per cent.

“Weak demand from the slowing European economy, the UK’s main export market, outweighed the effects of a favourable exchange rate,” the EEF said.

Despite that export orders held up better than those from the home market, where the survey revealed a negative balance of 26 per cent, the lowest since the final months of 2001.

Bob Hale, head of Grant Thornton’s manufacturing group, said: “The positive progress made by the sector over the last few years has been destroyed almost overnight by the catastrophic turmoil in the financial markets.

“The sector needs immediate help from the Government and the Bank of England to ensure funding for investment and further help in interest rate cuts and tax incentives. Without this the sector faces a very bleak outlook.”

The survey was conducted between October 30 and November 19, with 807 manufacturing companies responding.