Businesses in Britain’s second largest manufacturing exporter – the chemical industry – have reported declining sales, production levels and capacity utilisation.

Results from the Chemical Industries Association latest quarterly business survey show that compared to three months ago, 86% of companies expect their sales to remain the same or reduce, and 57% report lower production levels and capacity utilisation. Domestic demand remains low with only 4% of businesses reporting an increase in their domestic sales.

With the onset of winter energy costs, tough internal economic conditions that weaken demand and cheaper foreign imports saturating the European and domestic market, optimism remains low with over a third of responders expecting performance to get worse.

Steve Elliott, Chief Executive of the Association, said: “There is no hiding the fact that these survey results make for grim reading, with nine out of ten businesses anticipating reduced or, at best, static sales and optimism drifting further out with each passing quarter. In the short term we must do all we can to minimise the industry’s cost base – especially energy prices over the coming winter – and secure a more competitive net zero policy environment and funding landscape for our sector. Success here will give us a stronger platform for UK chemicals trade and investment growth when those global economic conditions start to improve.”

Michela Borra, Economist at the Association, said “With over two-thirds of companies foreseeing challenging operating conditions and weakening demand, coupled with production costs that remain over 20% higher than pre-pandemic levels, there is little room for medium-term optimism within the industry.”