An unexpectedly large fall in industrial output was announced on Monday as a leading business group warned that its latest survey of members had revealed a “menacing deterioration in UK prospects”.

The Office of National Statistics said there had been a 0.5 per cent fall in the Industrial Production Index in the three months to May compared with the three months to April. Over the same period, electricity and gas output had fallen by 2.0 per cent – the largest reduction since the aftermath of terrorist attacks in the US in 2001.