UK Manufacturing Continues to Contract in February, CBI Survey Reveals

Britain’s manufacturing sector continues to struggle, with output volumes and order books declining in the three months to February, according to the latest CBI Industrial Trends Survey. The ongoing challenges highlight persistent headwinds from high energy costs and a difficult international trade environment.

Production and Orders Decline

The survey, conducted among over 300 UK manufacturers, indicated a weighted balance of -14% in production during the period. This represents a faster rate of deceleration compared to the previous quarter. Output volumes fell in 13 of the 17 subsectors polled, with particularly challenging conditions reported in metal products, food and drink, and tobacco.

Total order books were reported as “below normal” by a majority of firms in February. Export orders similarly decreased, though at a slower pace than in January.

Energy Costs and Trade Concerns

Manufacturers anticipate a similar pace of decline in output over the next three months, citing ongoing pressures from elevated energy costs and international trade uncertainties. The energy-intensive sector faces some of the highest industrial electricity prices in the developed world, prompting calls for the removal of green levies from manufacturers’ energy bills.

Exporters are also grappling with a volatile trade landscape, influenced by factors such as changing tariffs and potential protectionist measures from the European Union.

Government Action Urged

Cameron Martin, the CBI’s senior economist, noted that even as the downturn in manufacturing output eased slightly in February, many firms continue to report customer hesitancy due to low confidence and high cost pressures. He emphasized the importance of the upcoming spring statement as a key opportunity for the government to restore confidence within the sector.

“Manufacturers want to see the government focused on accelerating industrial strategy delivery, addressing skills shortages, and lowering the cost of doing business by bringing forward energy costs support,” Martin stated. “Tackling punitive energy costs will strengthen competitiveness, ease cost of living pressures, and help boost demand across the economy.”