Manufacturing output slumped at its fastest annual pace since the early 1980s and much more than expected in November, official data showed, in a sign Britain may be heading for a sharp slowdown.

The Office for National Statistics said manufacturing output fell 2.9 per cent on the month, the biggest fall since the Queen's Jubilee in the summer of 2002 and well below analysts' forecasts for a reading of -0.7 per cent.

That took the annual rate down to -7.4 per cent, the weakest since June 1981. Industrial production fell 2.3 per cent on the month for a 6.9 per cent annual fall. That annual decline was the weakest since March 1981.

The figures are likely to reinforce expectations that interest rates, currently at 1.5 per cent, will fall near zero in the coming months as evidence of sharp downturn grows.

Separately, ONS data for producer price inflation for December came in stronger than expected.

Output prices were unchanged on the month, compared to analysts' expectations for a fall. That left prices up 4.7 per cent on the year, the weakest since December 2007.