The UK manufacturing sector has suffered its sharpest downturn in more than four years, as factory orders hit their lowest level since the height of the pandemic, according to new data from the Confederation of British Industry (CBI).
The CBI’s latest Industrial Trends Survey showed the monthly order-book balance falling to –38 in October 2025, down from –27 in September, marking the weakest reading since mid-2020. The figure is far below the long-term average of –14, underscoring the scale of the decline in new business across both domestic and export markets.
Economists say the slump reflects a combination of weak global demand, high energy costs, and persistent economic uncertainty surrounding the UK’s fiscal policy ahead of the upcoming national budget in late November.
“Manufacturers are facing the toughest conditions in years,” said a CBI spokesperson. “Cost pressures remain elevated, demand is softening both at home and abroad, and many firms are holding back on investment and hiring decisions.”
Exports Under Pressure
Export orders have seen an especially sharp drop, with expectations for international sales over the next 12 months at their lowest point since April 2020. Analysts attribute this to sluggish growth in key markets such as the Eurozone and the U.S., as well as ongoing post-Brexit trade frictions that continue to impact competitiveness.
Manufacturers also cited stronger foreign competition and currency volatility as major challenges. “The pound’s fluctuations are making it harder for UK firms to plan ahead,” said one industry analyst, adding that many exporters are seeing overseas customers shift toward cheaper suppliers in Asia and Eastern Europe.
Rising Costs, Falling Confidence
The sector’s struggles are being compounded by high energy bills, which remain one of the most significant burdens for British factories. Many firms have called for targeted government support to help offset these costs, warning that failure to act could result in further factory closures and job losses.
The CBI’s report also highlighted declining optimism among manufacturers. Business sentiment is deteriorating, with companies increasingly hesitant to commit to long-term projects. “Investment has slowed to a crawl,” the report noted, reflecting fears that the upcoming budget could introduce tax increases or spending cuts that might further dampen industrial output.
Economic Implications
Manufacturing accounts for roughly 10% of the UK’s total economic output, meaning the current downturn could drag on overall growth in the months ahead. Economists warn that a prolonged slump could spill into related sectors, including logistics, engineering, and energy.
The Bank of England faces a delicate balancing act: while inflation has cooled slightly, the ongoing weakness in production raises concerns about stagnation. Some analysts suggest that if the manufacturing slump persists, pressure will grow for the central bank to ease monetary policy to support investment and demand.
Government Response and Outlook
Business leaders are now urging the UK government to take swift action to stabilize the sector. Proposals include targeted relief on energy costs, simplified trade procedures for exporters, and incentives for investment in clean manufacturing technologies.
However, with the government preparing for its November 26 budget announcement, there is uncertainty over whether new spending measures will be introduced or if fiscal tightening will continue.
Despite the grim data, the CBI expressed cautious hope that a rebound could emerge in early 2026 if global conditions improve. Still, most economists agree that the road to recovery will be slow, with sustained policy support and export-led growth needed to restore confidence.
For now, British manufacturing remains under heavy pressure, a worrying signal for the broader economy as the country seeks stability amid global headwinds and domestic fiscal challenges.
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