UK factory orders improve as Brexit looms - CBI
By Sean Farrell
Date: Friday 18 Dec 2020
(Sharecast News) - UK manufacturers' order books improved at their strongest rate since the start of the Covid-19 crisis in December as the clock ticked down to post-Brexit trading, a Confederation of British Industry survey showed.
The reading for total order books in the business group's monthly survey improved to -25% from -40% in November, helped by a push by UK companies to secure goods with time running out for a Brexit trade deal.
The balance for December was the highest since February before the Covid-19 crisis erupted but was well below the -14% long-run average. Improvement in export orders was tepid, leaving order books well below average, the CBI said. The -44% reading was a long way short of the average of -18%.
The UK's factories have had to cope with the twin pressures of Covid-19 and Brexit in 2020. If no trade deal is agreed with the EU by 31 December manufacturers such as Nissan will face tariffs and restrictions on exports to the UK's biggest market.
Tom Crotty, chair of the CBI's manufacturing council, said: "While the roll-out of the Covid-19 vaccine raises hopes for the future, government will still need to support manufacturers to get through the winter. One of the key ways the government can help manufacturers is to strike a Brexit deal, as manufacturing is one of the sectors that would be hardest hit by a no deal Brexit."
Crotty is a director of petrochemicals company Ineos, whose multibillionaire boss Jim Ratcliffe supported Brexit and moved to the tax haven of Monaco in 2020.
Samuel Tombs, a UK specialist at Pantheon Macroeconomics, said: "Businesses in the UK have sought to build up their stocks of goods, including those largely assembled in Britain, due to the potential disruption that could occur early next year. Manufacturing output probably has overshot its trend level in December, and will fall back sharply in January, even if the Brexit transition is miraculously smooth, because businesses have brought forward demand."
Manufacturers expect output to drop at a similar pace over the next three months - a slight improvement on November. Pricing pressure will be muted, the survey indicated.
The survey was conducted from 23 November to 11 December and comprised responses from 261 manufacturing businesses.
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