Two-thirds of manufacturing companies are now freezing the pay of their workers, the highest number on record, a new report has revealed.

The Engineering Employers Federation said another 16 per cent of firms had deferred pay settlements in recent months, while average rises fell to 0.7 per cent from 0.9 per cent.

Pay rises are likely to continue falling in the coming months, while the number of firms freezing pay has reached the highest level since the EEF’s records began in 1987. David Yeandle, the EEF’s head of employment policy, said: “This unprecedented high percentage of manufacturers freezing pay and the resultant historically low level of average pay settlements are clear signs of the economic downturn.”