Softening in economic growth

Manufacturers reported a further slowing in the pace of domestic sales in the first three months of 2016, continuing the trend which began twelve months ago. Manufacturing exports grew on the previous quarter, probably helped by sharp falls in sterling and whilst welcome we must be conscious that UK current account is in significant deficit. The impact of well reported global issues is clearly having an effect but the home grown distraction of the forthcoming EU referendum is clearly making companies more cautious about investment and recruitment, both of which slowed markedly in the last quarter.

Stephen Wright, Managing Director, Thorite had this to say, “My own business is focussed entirely on the manufacturing sector as a supplier to a broad range of end user markets, including traditional engineering, food manufacture and printing & packaging. The last quarter has been undoubtedly tough and many businesses are again questioning spending and investment. The scenery remains the same; the relative strength of the pound, the collapse in oil price and reduced demand from China. Whilst the pound, from an export perspective seems to be moving in the right direction, we now have the steel crisis and Brexit debate adding to the “all of above” reasons why manufacturing is under achieving. Once again businesses need certainty to plan and not more uncertainty added by politician’s vanity projects.”

With the EU likely to dominate the minds of politicians through to June 23rd, the Chamber is preparing its post referendum activity which will include a strong call that Government gets back to the business of running the country and focus on issues which have been side-lined by the referendum. We know, because you tell us, that access to skills; improved road, rail and digital infrastructure; access to finance; business support and simplified taxation in all its guises are important to your business and we shall continue to remind government of the importance of manufacturing to the UK economy.

A copy of the full economic survey can be viewed here.

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