BUSINESS confidence among Britain’s manufacturers has fallen at the sharpest rate since the start of the pandemic, new research suggests.

A survey of over 300 companies found that escalating costs have affected their outlook on the economy.

Make UK said its study found that while recruitment and investment intentions were stable, the mood among companies has “darkened markedly” since the last survey in the summer when almost six in 10 companies saw a brighter economic outlook under a new government.

Almost three-quarters of manufacturers said costs increased by up to a fifth in the last year, while around one in 12 had seen their costs increase by up to half.

Make UK said the survey showed almost nine in 10 companies will see their business costs increase due to the new employment reform, while the Budget is expected to add substantial extra business costs to the sector.

Its senior economist Fhaheen Khan said: “While overall conditions had begun to gradually improve during the year, the Budget has brought this to a shuddering halt, with the substantial increase in National Insurance contributions potentially the straw that might break the camel’s back for some.

“There is now an urgent need for the government to look at other measures which might mitigate the impact of the rocketing costs that businesses are now facing.”

A government spokesperson said it had a “difficult inheritance,” but is “determined to go for growth and to work in partnership with businesses to invest in Britain’s future so we can make every part of the country better off.

“That is why we are delivering our Plan for Change with investment and reform to deliver growth and putting more money in people’s pockets,” they said.