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The sharp decline in British factories has continued this month and optimism among manufacturers is at its lowest level in more than 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 the end of 2022.
‘Manufacturers have entered the new year in a somber mood. Confidence has evaporated over the past three months as orders have fallen,” said Ben Jones, senior economist at the CBI.
“The drop in domestic deliveries comes amid widespread concerns about the impact of rising national insurance contributions (NICs), minimum wages and changes to employment law.”
The survey is the latest sign that the economy has slowed under the Labor government as the country reels from the £40bn tax rises announced in the Budget in October.
Pessimism: The Confederation of British Industry’s quarterly business optimism indicator fell in the first quarter of 2025 to its lowest level since the end of 2022
The £25bn increase in employer-paid NICs has proven particularly painful, hitting employment and output before it comes into force in April.
Elliott Jordan-Doak, an economist at Pantheon Macroeconomics, said the survey fueled expectations that the Bank of England will cut interest rates next month to boost growth.
He said: “The overall picture of slowing growth and persistent inflation, with payroll tax increases driving up inflation and cutting hiring, is being painted in a number of surveys.”
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