Brexit in-fighting has to end to halt falling manufacturing investment

LLB Reporter

Source: REX/Piero Cruciatti

Study finds

Britain’s manufacturers have seen an easing in conditions in the last quarter, continuing the downward drift from the very strong picture of growth seen across the board during 2017 according to a major survey published today by EEF, the manufacturers’ organisation and accountancy and business advisory firm BDO LLP.

According to the EEF/BDO Manufacturing Outlook Q2 survey, manufacturers are still seeing a positive picture and business confidence indicators are holding up looking forward to the second half of the year.

However, the combination of an easing of global growth and increased political uncertainty at home and abroad, has pushed the output balances in some sectors down from the lofty heights of last year. Together with a weaker outlook in the construction sector supply chain this means the outlook for the sector as a whole is slightly more subdued than it has been for some time.

In addition, whilst recruitment and investment are still positive, the latter has fallen to the lowest level for a year. This is very much at odds with the picture EEF would hope to see given the expectations of continued output growth and emerging capacity constraints, which suggests that the continued political uncertainty of Brexit negotiations is weighing on business investment.

Commenting, EEF Chief Economist, Lee Hopley, said:

“We continue to see signs of growth across manufacturing and, given weaknesses elsewhere in the UK economy, it is vitally important that we sustain this. However, the durability of this upturn is looking somewhat more fragile as many of the positive forces driving expansion last year such as a resurgent eurozone, a surge in global manufacturing investment and competitive pound are starting to fade.

“New or heightened uncertainties have also come into play, not least what feels like crunch time in the Brexit negotiations which have led to amber lights flashing again on the business investment outlook. This matters both for growth now and our longer term productivity prospects.”

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