Manufacturers are set to cut back on investment plans in the next two years because of increased uncertainty following the EU referendum vote, a new study shows.
A survey of more than 300 companies by the EEF found that three out of five were planning to spend the same or less on plant and machinery, an increase on previous years.
Uncertainty over future orders was the main reason affecting confidence, with some business leaders blaming political uncertainty.
The research showed that investment remained "stable" in the short term, with the outlook further ahead 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 of 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."
A Government spokesman said: "As we prepare to leave the EU we will do everything possible to protect, enhance and maximise the opportunities for British business.
"This Government is working closely with industry, and the EEF, on developing an industrial strategy that will upgrade productivity and ensure sustainable economic growth."