Manufactures slash their growth forecast ahead of Brexit
Manufacturers have slashed their forecast for growth next year with a "darkening picture" for exports ahead of the UK leaving the EU, according to a report.
Make UK said if there is no trade agreement, the forecast may be revised given the potential for "significant damage" to manufacturing, with the motor vehicles sector especially fearful of the impact of any tariffs.
The manufacturing organisation, and business advisory firm BDO, said their research also showed the" brutal impact" of the corona virus crisis, with the sector forecast to see a 12 per cent drop in output this year.
Make UK said it has substantially downgraded its growth forecasts for 2021 to just 2.7 per cent, down from 5.1 per cent last quarter.
"In addition to the darkening picture for exports, the survey shows investment intentions have now been substantially negative for three quarters in a row, a trend which Make UK believes is likely to worsen in the event of the further political turmoil that ' no deal' will create," said the report.
Stephen Phipson, chief executive at Make UK, said: "Manufacturing has stepped back from the abyss that it stared into earlier in the year, but it is going to be along haul back, with talk of a V-shaped recover y nothing more than fanciful.
"However, having endured over four years of political turmoil, combined with the pandemic, many in industry are feeling like an exhausted boxer in the final round of a bout, with a no-deal exit from the EU potentially landing a knockout blow.
"Should this happen the nascent recover y is likely to go into reverse, with significant damage to manufacturing and job losses following in already hard-hit areas and sectors."
Richard Austin, head of manufacturing at BDO, said: "After a torrid year, manufacturers who rely on continental supply chains and export markets now face a race against the clock to prepare for the end of the transition period.
"Manufacturers are now desperate for greater clarity so they can be released from the post-referendum paralysis which has made it nigh-on impossible to take long-term decisions."
According to the survey the balance on output improved to minus 5 percent which, compared with minus 36 per cent and minus 56 per cent in the previous two quarters, the latter being the lowest balance recorded in the survey' s 30-year history.
While the output balance for the next quarter is forecast to improve slightly to minus 3 per cent, it remains negative, highlighting an anaemic picture ahead for the sector and the highly unlikely prospect of a V-shaped recovery, as far as manufacturers are concerned.
The survey also shows a similar pattern for tot al orders with the balance improving to minus 3 per cent from minus 40 per cent and minus 53 per cent respectively in the previous two quarters.
The export order balance is forecast to drop sharply to minus 14 per cent, highlighting the concerns manufacturers have about the impact on exports as the UK finally leaves the EU.