Growth in domestic orders for smaller firms has “ground to a halt”, according to a new study.
Research among 331 SMEs suggested that growth is expected to stall in the coming months.
The CBI said its survey indicated that domestic orders are set to fall and exports will be “flat” for the rest of the year.
Business optimism has deteriorated at the fastest pace since the EU Referendum, and over the next year, firms expect to cut back “significantly” on investment, said the CBI.
Alpesh Paleja, the CBI’s principal economist, said: “SME manufacturers are clearly feeling the pressure, both from softer global economic momentum - reflected in a tailing-off of exports orders - and Brexit uncertainty biting hard on investment plans.
“The significant scaling back of planned capital spending is further proof that Brexit uncertainty is taking a real bite out of firms’ plans to grow and innovate.
“The Government’s number one priority has to be securing a withdrawal agreement with the European Union, so firms can enter the transition period and start to navigate the future with more certainty.”