The sharp downturn in British factories has continued this month and optimism among manufacturers is at its lowest level in over two years, according to an industry survey.
The Confederation of British Industry (CBI) said order books improved only very slightly in January.
And business optimism fell in the first quarter of 2025 to its lowest level since late 2022.
‘Manufacturers have entered the new year in a grim mood. Confidence has evaporated over the last three months as orders have dropped,’ said Ben Jones, lead economist at the CBI.
‘A fall in domestic deliveries comes amid widespread concerns over the impact of the increase in National Insurance Contributions (NICs), minimum wages and changes to employment law.’
The survey is the latest sign the economy has slowed under Labour as the country reels from £40billion of tax hikes announced in the Budget in October.
Gloom: The Confederation of British Industry’s quarterly gauge of business optimism fell in the first quarter of 2025 to its lowest level since late 2022
The £25billion increase in NICs paid by employers has proved particularly painful – hitting jobs and output before it comes into force in April.
Elliott Jordan-Doak, an economist at Pantheon Macroeconomics, said the survey fuelled expectations that the Bank of England will cut interest rates next month to kick-start growth.
He said: ‘The general picture of slowing growth and stubborn inflation, with payroll tax hikes boosting inflation and cutting hiring, is being painted in a range of surveys.’
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