Up to 150,000 British manufacturing jobs will be lost this year as the world economic downturn forces companies to slash spending, the Engineering Employers' Federation warned last week.
The EEF's quarterly survey shows that the threatened recession has begun to hit UK producers.
It claims that the number of job cuts over the next two years will reach 150,000, with 60,000 being lost this year.
The survey is the latest to point to weaker output and subdued inflationary pressure.
The EEF has revised its downward forecast for engineering growth this year from 3.5 per cent to 3.2 per cent.
It blames the sharp slowdown in electronics, caused by weaker US demand and an end to the boom in Internet communications technology.
Last year engineering output, which accounts for nearly half of manufacturing, grew by 3.9 per cent.
The EEF has welcomed the Bank of England's interest rate cut of 0.25 per cent to 5.5 per cent. Stephen Radley, the EEF's chief economist, said, "The cut is the right response to fragile markets and will give manufacturers' confidence a welcome shot in the arm.
"With inflation remaining under control, manufacturing will look to the Bank to keep a very close eye in the coming months on the state of the world economy and its impact on Britain."
"The cut will lessen or prevent a more serious recession, which in turn will help restrict job losses for the rest of year."