Friday, June 5, 2020

Manufacturing exports hit three year low, sparking calls for coronavirus support

The UK’s manufacturing exports have slumped to their lowest levels in three years as manufacturers urge government to mitigate the impact of coronavirus.

The Q1 Manufacturing Outlook survey from Make UK and BDO show that output fell sharply on back of weak orders and autumn stockpiles wound down.

Moreover, the survey found that export orders have turned negative for the first time since Q4 2016. Unsurprisingly now that we’re in the Brexit transition period, there’s evidence that EU customer sentiment is turning away from the UK.

Following the release of the latest survey, the nation’s manufacturers are now calling on the government to work with industry and take whatever steps are necessary to mitigate the impact of coronavirus.

The survey, taken before the recent escalation of the economic situation across Asia and Europe, confirms that the sector had ground to a standstill at the end of 2019 as the stockpiles from a potential October EU exit wound down.

And, while the domestic picture had begun to improve slightly, exports had already fallen sharply in response to a downturn in world trade, a situation likely to be exacerbated by current events.

Make UK and BDO warned the true impact of coronavirus may not yet have been recorded but the next few weeks should shed some light on how the sector is responding to disruptions that are set to send shockwaves through industry supply chains.

“After the rollercoaster ride of the last twelve months and a series of stockpiling highs and investment lows the election result had at least provided some degree of political certainty and a prospect of a return to cyclical economic normality, but the escalation of coronavirus is likely to knock that off course,” said Seamus Nevin, Chief Economist at Make UK.

“Even before the current situation the shocking drop in exports could not have come at a worse time ahead of potentially difficult trade talks where the clock is running down fast. It is now vital that Government works with industry to limit the damage to industry and take whatever steps are necessary to safeguard skills in particular.”

Tom Lawton, Head of Manufacturing at BDO, added: “As coronavirus fears take hold and the impact on the sector’s crucial supply chains remains largely unknown, businesses should be preparing themselves for more volatility this year.

“The dramatic fall in exports only exacerbates the challenges to come. There is no doubt that the sector needs the Government to step up and deliver a clear and supportive industrial strategy to help navigate the choppy waters ahead.”

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