UK manufacturers enjoy post-Brexit surge in orders

UK exports have surged as the pound has lost value. [Msujan/Shutterstock]

Britain’s factories are growing at their fastest pace in more than three years, helped by the fall in the value of the pound after the Brexit vote and a recovery in core markets in Europe, a survey showed on Monday (6 March).

The survey, by manufacturing lobby group EEF and consultancy BDO, added to signs that British factories are enjoying a growth spurt, something that Brexit supporters said would be one of the early benefits of leaving the European Union.

However, many economists say the revival is unlikely to offset fully the impact on the economy of slower consumer spending as sterling’s fall pushes up inflation. Manufacturing accounts for about 10% of Britain’s economy.

“The post-referendum wobble that defined UK manufacturing’s performance in the second half of 2016 has been left firmly behind with manufacturers now rallying far more strongly than even they had predicted,” EEF chief economist Lee Hopley said.

Last month, GKN and Meggitt, two British engineering firms, reported better than expected results and growing business orders.

UK firms report stronger growth, but SMEs hoard cash as Brexit looms

Growth in the UK private sector picked up speed, according to a survey published on today (3 March) by an employers group but Britain’s smaller companies are hoarding cash and cutting investment as confidence starts to wobble as the government sets off down the uncertain path of leaving the EU.

The survey by EEF and BDO showed output for manufacturers sped up sharply with the balance of firms reporting growth rising to 31% in the first quarter, its highest since the third quarter of 2013, when Britain was starting to cast off the after-effects of the global financial crisis.

The balance of firms expecting growth in the second quarter rose to 33%.

Only a fifth of companies said they had not yet seen any pick-up in overseas markets while business confidence, investment and employment intentions all rallied.

But prices are likely to rise further as manufacturers seek to ease pressure on their margins caused by the pound’s fall which makes their exports cheaper but the imports they use more expensive, the survey showed.

The EEF raised its forecast for growth in the sector to 1.0% this year, from a previous estimate of a 0.2% contraction, and it also increased its estimate for British economic growth as a whole to 1.8% from 1.3%.

The recovery in manufacturing has also been shown in official economic data. In the October-to-December period of last year, factory output was up 1.2% from the previous three months, the strongest performance since the Brexit vote.

Data for January, which is due to be published on Friday, is expected to show another increase in annual terms.

A hard border 'will cause recession' in Ireland

Ireland will suffer greatly from the establishment of a hard border with Ulster to the North. Already, the weak pound has cost its economy dearly. EURACTIV’s partner Ouest-France reports.

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