Manufacturers are halting investment in their businesses ahead of Brexit, with even stockpiling activity now subdued only weeks before the UK is set to leave the EU, raising worries over whether the sector is less prepared than six months ago.
Overall industry investment intentions turned negative for the first time since the immediate aftermath of the Brexit referendum in 2016 in the third quarter, according to Make UK, which represents UK manufacturing. More companies are also reporting that domestic orders are falling, rather than rising. Export orders have fallen despite predictions of a potential boost from the weakening of sterling.
“Industry is facing a perfect storm of factors, compounded by a hard Brexit which could not be coming at a worse possible time,” said Seamus Nevin, chief economist at Make UK.
“In normal circumstances a global slowdown on its own would be enough, but add trade wars and the biggest shock to our economy since the war and there seems little doubt that, barring a remarkable turnround, the sector may be heading for recession.”
According to Make, the total order balance — between companies reporting that orders are rising or falling — fell to 2 per cent in the third quarter. This is down from 8 per cent in the second quarter and 16 per cent in the first, when orders were boosted by significant levels of stockpiling by businesses ahead of the earlier proposed date for the UK to leave the EU in March. [...]
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