Manufacturers are set to cut back on investment plans over the next two years due to increase uncertainty after the EU referendum vote, a new study shows.
A survey of more than 300 companies by the EEF found that three in five were making plans to spend the same or less on plant and machinery.
Uncertainty over future orders was the main reason manufacturers were uneasy about investment, with some business leaders blaming the political uncertainty surrounding Brexit.
The research showed, however, that investment was "stable" in the short term, but the long term was more uncertain.
Ms Lee Hopley, the EEF's chief economist, said: "Fears of an immediate collapse in business investment appear to be unfounded for now.
"UK manufacturers have been investing at a healthy pace in recent years - and while that rate of increase wasn't going to continue forever, keeping up with customer needs and the competition is ensuring that investment stays on track for many.
"But, the spike in political risk should not go unnoticed. There is caution amongst businesses, which will inevitably make it more difficult to get big decisions across the line.
"It's over to the Autumn statement now to press ahead with policies that further enhance the UK business environment for spending on modern machinery and increasingly important intangible investment."
Charles Garfit from Santander, which helped with the report, added: "It is an understandable reaction from manufacturers to scale back on investment, given the uncertainty, particularly as it follows a relatively buoyant phase for the sector."