Julia Irvine 2 Dec 2019 03:54pm

Manufacturing growth barely registering

Manufacturing in the UK is stagnating due to continuing political uncertainty over Brexit and the General Election as well as the downturn in the global markets

Orders have ground to a halt and manufacturers’ intentions as far as investment and recruitment are concerned remain weak. In fact, as the latest manufacturing survey from Make UK and BDO reveals, virtually all the major indicators are currently flatlining. However, as it points out, at least they haven’t got worse since the last quarter.

The survey of 339 companies finds that manufacturers’ confidence in the economy picked up slightly after the UK avoided a “no deal” cliff edge at the end of October but warns that this is likely to be a respite. The sector is only likely to kickstart investment programmes and perform better once Brexit is finally sorted one way or another.

“Firms are reporting weaker business activity overall, especially from the domestic UK market but export orders have increased slightly this quarter,” says Make UK CEO Stephen Phipson. This, he suggests, indicates greater confidence from foreign customers about buying UK goods as the worry about an end-of-year no-deal Brexit fades.

“Christmas, and the end of the year, are a time when people reflect on the past and try to begin afresh. Manufacturers will hope that the next 12 months will see an end to the political charade in Westminster and a return to focus on critical issues such as delivering a long-term vision for the economy.”

BDO’s head of manufacturing, Tom Lawton, believes manufacturers face an uphill struggle. “Investment is critical to UK manufacturing. The sector is facing increased global competition and major change in respect of industry 4.0 and sustainability. An increase in first year capital allowances – something that a quarter of companies see as a priority for the new government – would be a good incentive to boost capital investment in 2020 and beyond. This should be considered as part of a long-term sustainable industrial strategy.”

The weak picture that has emerged has persuaded Make UK to forecast manufacturing growth of 0.1% in 2019. It has also downgraded the sector’s predicted growth rate from 0.6% to 0.3% in 2020.