Andy Burnham was yesterday urged to slash industrial electricity prices as manufacturers suffered the steepest rise in costs in four years.

New orders also fell sharply – at the fastest pace in six years – according to figures for July compiled by the Confederation of British Industry (CBI).

They illustrate the scale of the challenge facing the new Prime Minister after setting out his ambition to reindustrialise Britain.

The survey found that falling orders reflected both domestic and export trade weakening – and that firms expect them to decline again over coming months ‘at a rapid pace’.

Sentiment among UK manufacturers continued to decline as costs outpace prices, squeezing profitability.

That has left firms cutting investment plans and jobs, with deeper cuts to employment expected over the next few months, the poll found.

A key problem is that UK factories pay 45pc more for their electricity than the average across the G7 group of major advanced economies.

Ben Jones, senior lead economist at the CBI, said: ‘We’re seeing manufacturers being squeezed from both sides.

‘Costs continue to climb while weak demand limits their ability to raise prices – leaving firms to absorb the pressure through shrinking margins, weaker investment and further cuts to employment.

‘If the new administration is serious about reindustrialising Britain, restoring industrial competitiveness must be one of its first priorities.

‘Cutting industrial electricity costs would give manufacturers greater confidence to invest, expand and create jobs.’

Worse could be to come for manufacturers’ costs as oil prices surge again.

Rob Wood, chief UK economist at Pantheon Macroeconomics, said: ‘Looking ahead, we expect high oil prices and ongoing trade-related uncertainty to weigh on sentiment amongst manufacturers over the coming year, leading to only small gains in the sector.’