UK recovery under threat

tHE post-election recovery in British manufacturing could run out of steam because of the coronavirus.

Research group IHS Markit said its index of activity in UK factories – where scores above 50 show growth – rose from 50 in January to 51.7 in February.

that was the strongest score for ten months and suggested that the economy has perked up since the election.

the report showed business confidence at a nine-month high ‘reflecting planned investment, product launches, improved market conditions and more settled political outlook’.

But it warned of disruptions to supply chains due to the coronavirus outbreak.

Rob Dobson, director at IHS Markit, said: ‘the UK manufacturing sector remained in recovery mode in February, as reduced levels of political uncertainty translated into further growth of output and new orders.

‘Supply-chain disruptions were emerging rapidly, however, as the Covid-19 outbreak led to a lengthening of supplier lead times, raw material shortages, reduced inventories of inputs, rising input costs and reduced export orders from Asia and China.

‘With supply-chain headwinds rising, and trade negotiations with the EU starting, it remains to be seen whether the recovery can stay on course.’

Samuel tombs, chief UK economist at Pantheon Macroeconomics, said: ‘note that 80pc of responses to Markit’s survey were before the virus spread to Western economies. Accordingly, we have to brace for a sharp fall in manufacturing output.’