October 23, 2025 – Britain’s manufacturing sector is going through hell right now. The CBI Industrial Trends Survey shows output dropped 16% in the quarter to October, with new orders collapsing at the fastest pace since the COVID lockdowns. Both domestic and export orders tanked by 26% – we haven’t seen numbers this brutal in over four years.
What’s really got our attention is how investment plans have absolutely cratered: spending intentions for plant and machinery hit -46%, the weakest since April 2020. Only 13% of firms are investing to expand capacity now, matching the dire levels from the 2009 recession.
The squeeze is happening from every direction. Costs remain stubbornly high while firms can’t pass them on – domestic prices are rising slower and export prices actually fell, which means margins are getting crushed. Employment dropped at the fastest clip in five years, and manufacturers expect things to worsen through January. Competitiveness deteriorated across all major markets, including the UK itself.
Here’s what worries us most: this isn’t just cyclical weakness anymore. When capacity expansion investment hits financial crisis levels while orders collapse across both domestic and export markets simultaneously, that’s a structural confidence problem. The pound’s going to feel this, especially with the Budget uncertainty hanging overhead.
We reckon sterling traders should brace for more downside volatility – this survey is basically screaming that businesses have lost faith, and that’s terrible news for GBP positioning. Without serious government intervention on energy costs and a credible growth plan, manufacturers will keep pulling back, and the currency will pay the price.
