|Demand for British goods fell sharply this month, as shockwaves from the crisis in Cyprus saw a closely watched factory index fall to its lowest level in two and a half years.
A survey by the Confederation of Business Industry (CBI) showed the total order book balance fell to -25pc in April from -15pc in March, where the figure represents the difference between positive and negative responses.
April's reading is the lowest since October 2010, and far lower than the balance of -14pc expected by economists.
The recent weakness in the pound had eased fears over prices, the CBI's separate quarterly industrial trends survey found, with the number of businesses saying that prices would limit export orders falling to the lowest level since April 2012.
Sterling has fallen about 6pc against the dollar since the start of the year, and 5pc versus the euro.
The survey of 380 manufacturers also found that businesses were slightly more upbeat than in the previous quarter, with an optimism index rising to 5pc from zero in January.
However, concern over the effect of political instability and economic conditions abroad on exports rose to its highest for a year.
“Although weaker sterling has eased concern about international competitiveness, manufacturers highlight the potentially chilling effect of political and economic instability abroad on export orders, such as the Cyprus crisis,” said Stephen Gifford, CBI director of economics
Official statistics show that UK industrial output bounced back in February from the previous month, helped by a rise in manufacturing output.
However, a recent survey of purchasing managers showed that bad weather and weak demand from the crisis-hit eurozone left Britain's manufacturing sector, which powers 11pc of the British economy, contracted for a second successive month in March.