Britain’s manufacturing sector has suffered the worst slump in orders for more than two and a half years as the car and textile industries struggled against Brexit headwinds.

The CBI said its industrial trends monitor for May showed that without an agreement with the European Union, the manufacturing sector was gripped by “economic paralysis” and moving “ever closer to disaster”.

Amid concerns that British Steel faces bankruptcy with the loss of 4,500 jobs and a further 20,000 among suppliers, the CBI said continued stockpiling was not enough to offset the slowdown in manufacturing as a result of parliament’s failure to agree a Brexit deal.

Order books were below normal at 32% of manufacturers compared with 23% of firms where order books were above normal to give a rounded balance of -10%. The CBI said May’s survey revealed the lowest order balance since October 2016, while export orders worsened to a balance not seen since immediately after the referendum vote in July 2016.

The slump came as the pound continued a slide that has knocked five cents off its value against the US dollar and four cents off its value against the euro since the beginning of the month. Sterling fell to $1.27 after hitting $1.32 earlier in the month.

Many firms have benefited from the lower pound, which allows them to sell their goods abroad at lower prices. But the higher cost of imported raw materials has offset the effect and forced many firms to drop their prices even further.

The CBI said price pressures across the 279 firms surveyed were having an increasing impact on margins across the sector in May.

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Anna Leach, the CBI’s deputy chief economist, said the survey provided further evidence that manufacturers had been stockpiling at a rapid pace as part of their Brexit contingency plans.

“When combined with a sharp decline in order books, it’s clear why manufacturing firms are so keen to see a swift end to the current Brexit impasse,” she said.

“With investment down, stockpiling up, and the threat of a no-deal ever present, we desperately need parliament to thrash out a viable deal in the national interest.”

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Output growth was mainly driven by the mechanical engineering, chemicals, and food, drink and tobacco sub-sectors.

Tom Crotty, the group director of Ineos, Britian’s largest chemicals business, said the huge amounts of money and resources put into Brexit contingency planning denied firms cash they could spend creating jobs or making investments in new technology.

“This relentless Brexit uncertainty must be lifted as a matter of urgency,” he said.



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