Britain's manufacturing sector shrank at its fastest rate in more than three years in July, according to the latest PMI survey.
The decline has dealt a severe blow to hopes that the country may get out of recession over the summer months.
The UK index dropped to 45.4, down from 48.6 in June - far below analysts' expectation of 48.4.
British manufacturing activity now sits at a 38-month low, caused by a significant contraction in new orders and output.
Meanwhile, Italy has reported its fastest rate of job losses since October 2009, as Germany confirmed the longest contraction of new purchase orders since records began.
The IOBE think tank also announced that the Greek economy is expected to contract 6.9% in 2012, after a first quarter estimated drop of 6.5%, and Greek manufacturing now sits at its 35th monthly decline in output.
According to market figures, 10 out of 11 surveyed EU countries are now in manufacturing PMI contraction .
While significant sections of the EU's manufacturing capability have contracted, some areas have boomed, with British and German luxury carmakers reporting ongoing success.
On Wednesday BMW, the world's largest premium car firm, reported its second best quarterly operating profit - along with the creation of 3,200 new German jobs.