Please! Not The Road To Healey Hell

As the CBI Industrial Trends Survey shows a positive August for manufacturing, the organisation is warning John Healey must not drive it all to hell with a bad Autumn Budget.

Manufacturing order books saw a noticeable improvement following a sharp deterioration over April-July

Total order books were reported as below normal to the least extent since November 2024.

Healey is the new Chancellor of the Exchequer who replaced Rachel Reeves on 20 July.

Decline slowing

Output volumes fell again in the three months to August but at a slower pace relative to July. Manufacturers expect the pace of decline to slow further in the three months to November.

Selling price expectations strengthened in August, relative to July, and remain above historical norms. Stocks of finished goods were seen as adequate in August, standing slightly above the long-run average.

The survey, based on the responses of 273 manufacturers, found that output volumes fell in the three months to August, at a slower pace relative to the quarter to July (weighted balance of -17%, from -24% in the quarter to July). Although manufacturers expect output volumes to fall again in the three months to November (-7%), expectations were the least negative since the beginning of the Iran War.

Total order books were reported as below normal in August but to the smallest extent since November 2024 (-25%, from -45% in July). Total order books nonetheless remain below their long-run average (-14%).

Energy relief

Cameron Martin, CBI Senior Economist, said: “The forthcoming Autumn Budget must avoid creating unnecessary uncertainty or adding extra costs that could put at risk the improvement in expectations.

Instead, the government should use the Budget to build on efforts to restore competitiveness, especially delivering the British Industrial Competitiveness Scheme, while going further to support reindustrialisation by reducing policy-driven energy costs for all businesses across the country.”

The government's new British Industrial Competitiveness Scheme (BICS) will exempt eligible manufacturers from certain costs on their electricity. There is a short window for manufacturers to apply to get the benefits.

Export

Export order books recovered to normal for the first time in over four years.

Martin added: "Stronger global demand is providing some welcome relief for export manufacturers, with export order books improving sharply.”

"Hall in all, there seems to be a positive feeling amongst manufacturers. However, it is too soon to know whether this marks the beginning of a sustained shift in confidence, particularly given ongoing cost pressures reported by every manufacturer that responded to our survey.”

Picture: Cameron Martin is a Senior Economist in the Economic Intelligence team at the CBI.

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