Manufacturing sector hampered by headwind of Brexit uncertainty

UK manufacturers have reported a slowdown in output growth amid an intensification of headwinds from Brexit uncertainty and a weaker global trading environment, a key survey shows.

About 27 per cent of UK manufacturers reported a rise in output volumes in the three months to February, and 20% recorded a drop, according to the survey by the Confederation of British Industry.

The net 7% posting an increase signalled a sharp slowdown in growth, with a balance of 16% having reported a rise in output volumes in the three months to January.

Meanwhile, a balance of 8% of UK manufacturers projected an increase in output volumes over the coming three months.

Anna Leach, CBI head of economic intelligence, said: “UK manufacturing activity has moderated at the same time as headwinds from Brexit uncertainty, and a weaker global trading environment have grown.”

She added: “The time for Brexit compromise to support the UK manufacturing industry is now. The clock is ticking quickly towards crisis point. It is of critical importance that politicians of all stripes and on both sides of the channel come to agreement on the terms of a Brexit deal as soon as possible, to allow our manufacturers to continue to create, make and trade their goods with certainty.”

Tom Crotty, who chairs the CBI’S manufacturing council and is a director of chemicals and oil products group Ineos, said: “Manufacturers have proved highly resilient in the difficult circumstances they find themselves in.

“However, it is without doubt that Brexit uncertainty has been a millstone on growth and investment in the sector.” He added: “We are now weeks away from the very real prospect of a no-deal Brexit, which would be hugely damaging to manufacturers. The political paralysis on Brexit must urgently give way to compromise and an acceptable deal being struck.”

A survey published this month by Scottish Chambers of Commerce showed manufacturers north of the Border recorded their sharpest drop in optimism since 2012 in the fourth quarter of last year, as their orders fell amid Brexit uncertainty. Scottish manufacturers cut back on staffing and investment in the final three months of last year.

The survey, in collaboration with the University of Strathclyde’s Fraser of Allander Institute, showed manufacturers saw orders fall from Scotland, the rest of the UK and overseas in the fourth quarter.