UK factories curtail production at record rate, CBI survey says

BRITISH factories are curtailing production at record rates on concern that cuts to government energy subsidies will drive up their costs, an industry survey showed.

Some 62 per cent of manufacturers were running below their full capacity in the three months to January, up from 46 per cent in the summer, Confederation of British Industry (CBI) said.

It was the highest share of factories operating below their full capabilities since January 2021 and also reflected a global slowdown in manufacturing. The share of firms warning that weaker orders would constrain their future output also rose to the highest level since April 2021.

Energy-intensive industries are among the hardest hit by the surge in energy prices last year, but the Chancellor of the Exchequer has said he will reduce the amount of support the Treasury is giving to cushion manufacturers against natural gas and electricity costs. While some heavy users get a big discounts, business groups have warned the state support is not enough.

However, the CBI’s industrial trends survey showed some signs of hope for manufacturers. The rate of cost increases eased to the slowest since April 2021, new orders were flat following a decline in the previous three months, and hiring “remains strong”, the industry group said.

“Global supply chain pressures, labour shortages and energy costs are easing, enabling unit cost growth to ease back from record highs,” said Anna Leach, deputy chief economist at the CBI. “But there are signs that demand is easing too.” BLOOMBERG