THE REGION'S beleaguered manufacturers have suffered another blow, according to new figures.

Britain's manufacturing companies have just suffered their worst month since last October.

According to figures just released by the Office for National Statistics (ONS), output nationally fell by 0.4 per cent - twice as much as the worst estimates by industry economists.

Manufacturers in the region have been calling on the Bank of England to cut interest rates to stimulate the economy. The news will also add further fuel to demands for an early Government lead on a euro referendum.

Several of the region's largest manufacturers - led by Nissan - have warned they will switch investment to European factories unless the UK signs up.

The news is bound to fuel arguments that the growth in the UK economy has been more sluggish in the first quarter of the year than previously thought.

It will also add weight to the view that Chancellor Gordon Brown's annual economic growth target is over-ambitious, and that the Bank of England should cut interest rates to help manufacturers cope.

The fall in output during March was partly due to a significant decline in output in the electrical and optical equipment industries, which registered a 2.6 per cent decline.

Falling manufacturing production was reportedly widespread, with ten of the 13 sub-sectors reporting lower output in March, when the war in Iraq began.

Electricity, gas and water industries saw output decrease by 3.1 per cent due to relatively high temperatures in March, the ONS said.

Between February and March, output of oil and gas extraction fell by one per cent.

The biggest rise was a 1.3 per cent increase in transport equipment due to strong car production in March.

The wider measure of industrial production - which also includes oil and gas output - registered a fall of 0.8 per cent in March.

John Butler, economist at HSBC, said: ''These numbers are undoubtedly bad, consistent with the gloomy surveys.

"Perhaps March's fall was exaggerated by the uncertainties associated with war."

Steve Radley, chief economist at the Engineering Employers' Federation, said: "While it is difficult to quantify the war effect on one month's figures, the wider picture only serves to emphasise the severe pressure still facing manufacturers.

"With the overall economy flirting with stagnation, it is even more difficult to understand why the Bank did not cut interest rates this week."

Responding to the fugures, Liberal Democrat Shadow Chancellor Matthew Taylor said: ''Manufacturing is still floundering with output below the levels when Labour came to power.

"It is Gordon Brown's complacency on the economy, rather than his forecasts, that is threatening jobs, investment and growth.