"While the survey data at first glance makes for reassuring reading, there is a clear weakening trend which, if it continues, would push some elements of industry over the edge before too long,” says Stephen Phipson, chief executive at Make UK. “Earlier this year there was clear evidence that industry was on steroids as companies stockpiled. Underneath, however, there is now growing proof of European companies abandoning UK supply chains, while Asian customers baulk at the unknown of what may exist as the UK leaves trade agreements which operate under EU rules.

“With this picture it would be the height of economic lunacy to take the UK out of the EU with no deal in place,” he adds. “The race to the bottom in the interests of party ideology has to stop, otherwise there will be a heavy price to pay.”

According to the Make UK/BDO survey, employment and investment intentions dipped after the temporary boost from stockpiling in Q1. Employment intentions are forecast to fall in the next three months to just +6%, from +16% in Q2, while investment levels fell to +6% in Q2, from +12% in Q1.

Tom Lawton, head of manufacturing at BDO, says: “Official data shows a consistently downward trend in investment intentions since the EU referendum in 2016. The impact is severe, with UK manufacturing at risk of investment paralysis as the uncertainty of Brexit drags on.

“Companies need to prepare for a more digitally fluent future, both in terms of the technologies they deploy and the people they recruit, but right now manufacturers are not confident of a future worth investing in,” he continues. “Stockpiling is dying down and export orders continue to fall away as global competition continues increasing. Combine that with a government mired in chaos and we’re now starting to see a true reflection of the crippling anxieties the sector is facing.”

According to the survey, the total order balance, although still in positive territory, halved from +16% in Q1 to +8% in Q2, indicating the significant rate of weakening. UK orders were better than export orders at +11%, while the balance of export orders fell to +8%, from +12% in Q1.

The last time export balances were at this level was 2016, before the strong global performance through 2017 and 2018. Significantly, a number of industry subsectors are now reporting flat or negative balances, especially metals, which is being impacted by the trade war between the US and China, and the poor outlook for UK motor vehicle production.

Output has remained in similarly positive territory at +17% (down from +22% in Q1 when stockpiling was at record levels), though looking forward it is forecast to fall to +11% as this unwinds and the impact of falling orders feeds through.

As a result of this weakening picture, Make UK is now forecasting manufacturing growth of just 0.2% in 2018 and an anaemic 0.8% in 2020. GDP is forecast at 1.2% in 2019 and 1.6% in 2020.

Lawton says: “The GDP growth forecast for 2020 is based on an agreed exit from the EU. A ‘no deal’ scenario would likely deliver a much worse position.”