THE region's manufacturers reacted with dismay to yesterday's decision by the Bank of England to leave interest rates on hold.

The Engineering Employers' Federation (EEF) said a further cut would have provided much-needed support for hard-pressed businesses.

The Bank's monetary policy committee decided to leave the cost of borrowing at four per cent for the third month running.

EEF northern regional director Alan Hall said: "This is a missed opportunity to boost business confidence and give short-term support to a manufacturing sector which remains firmly depressed."

Economists widely believe the interest rate-cutting cycle has come to an end.

There had been speculation that the Bank's nine-strong monetary policy committee could move to raise rates to calm consumer demand amid worries that shoppers are overstretching themselves by taking on growing debts.

But Britain's struggling manufacturing industry has been hit by the strong pound and weak global demand.

Union bosses and business leaders had called for a rate cut in order to prop up the sector and help prevent thousands of job cuts.

Meanwhile, figures from the Office for National Statistics yesterday showed manufacturing output fell 0.5 per cent in December. There was a 0.6 per cent drop in November.

Year on year, manufacturing was 6.4 per cent lower than December 2000 - the largest fall since August 1991.