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With fewer than 10 days before the Brexit deadline of 31 October, respondents to the survey said they were planning to scale back their purchases of new machinery and IT equipment over the next year at a rate not seen since the 2008 financial crisis.
Meanwhile, the number of companies going bust in the last three months jumped 35% on the previous quarter to the highest level since 2013. Analysis of official insolvency figures by the accountancy firm KPMG found that the construction industry was the worst affected, putting it just ahead of the retail sector as the source of most corporate insolvencies in 2019.
The hotel group Whitbread, building supplies firm Travis Perkins and car dealer Pendragon also unveiled profit figures dented by customers’ Brexit fears.
Whitbread said business bookings were down as companies reined in costs ahead of the Brexit deadline while Pendragon lost sales as consumers cut back on buying big ticket items, including cars.
Both the construction and manufacturing sectors have entered a prolonged recession, leaving the services sector to keep the economy afloat over the last year.
Speaking to the Guardian, the shadow chancellor, John McDonnell, said the latest figures showed that Brexit uncertainty would have long-lasting effects on most companies, but especially manufacturing firms after years of low or zero investment in their businesses.
“The Tories’ disastrous mismanagement of our economy and their botched Brexit process has undermined our manufacturing base. Along with the mismanagement of our public finances, the reputation the Tories falsely claimed for economic competence has been completely shot. They are seen for what they are: a group of incompetent blusterers,” he said.
The CBI said Brexit uncertainty, shrinking order books and a slump in global trade were blamed for the worst outlook in 10 years for the manufacturing sector with the car industry and transport equipment sectors cutting back at the fastest rate.
Business optimism across the industry was also affected, hitting its lowest level since the referendum vote in 2016, according to the CBI’s industrial trends survey, while optimism about exports for the year ahead deteriorated by the greatest degree in 18 years. [...]