Manufacturing growth slows due to Brexit uncertainty, says CBI

24 September 2018

Analysis from CBI has revealed that UK manufacturing companies saw slow growth in the last quarter as a result of progress of Brexit negotiations.
Georgina Hines

UK manufacturing growth has slowed since June but remains above the long-run average, according to the latest Industrial Trends Survey from CBI – a quarterly report monitoring the UK’s markets. The lull has been attributed to uncertainty regarding the UK’s Withdrawal Agreement with the EU and weak household income growth.

Ten out of 17 sub-sectors recorded growth in output, driven heavily by the mechanical engineering, food, drinks and tobacco, plastic products, and metal products industries.

However, the same report predicts growth over the next three months looks stronger as a result of continued external demand and a lower exchange rate for the pound.

‘Robust output volumes and order books are good news for British manufacturers, who have benefitted from a healthy global economy and lower sterling exchange rate. However, the continued uncertainty surrounding the final six months of Brexit negotiations presents a real risk to the continuation of this strong momentum,’ said Tom Crotty, Director at INEOS and Chair of the CBI Manufacturing Council.

Manufacturing is predicted to be disproportionally affected by Brexit, due to economic and regulatory unpredictability, potential gaps in the talent pool due to immigration controls, and tariff and trade complications within the supply chain post-Brexit.

‘In the coming months, manufacturers will be looking to the government to protect the frictionless trade with the EU that they need to thrive. And it is important that measures to bolster competitiveness domestically – such as getting the Apprenticeship Levy fit for purpose – aren’t overlooked,’ said Crotty.

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