Overseas firms are moving supply chains away from the UK over Brexit unease

EU firms abandon UK
(Picture credit Lukassek / Shutterstock.com)

The Quarter 2 Manufacturing Outlook survey, published today by Make UK, the manufacturers’ organization and business advisory firm BDO LLP, has found that Brexit uncertainty is leading foreign manufacturers to seek new suppliers outside of the UK. Anna Tobin reports

Brexit uncertainty and the prospect of a no-deal Brexit is causing serious damage to Britain’s manufacturing sector, highlights the Quarter 2 Manufacturing Outlook survey. It finds that domestic and export orders are continuing to fall as artificial stockpiling winds down; that the gap between output and orders has grown; and that there is a growing body of evidence to show that overseas customers are switching their supply chains away from the UK. The culmination of all this is that manufacturing is forecast to grow just 0.2% in 2019 and 0.8% in 2020 and investment in manufacturing is down.

“Whilst the data at first glance makes for reassuring reading, there is a clear weakening trend which, if it continues, would push some elements of industry over the edge before too long,” warns Seamus Nevin, chief economist at Make UK. “Earlier this year there was clear evidence that industry was on steroids as companies stockpiled. Underneath, however, there is now growing evidence of European companies abandoning UK supply chains, whilst Asian customers balk at the unknown of what may exist as the UK leaves trade agreements which operate under EU rules.

“With this picture, it would be the height of economic lunacy to take the UK out of the EU with no deal in place. The race to the bottom in the interests of party ideology has to stop otherwise there will be a heavy price to pay.”

Tom Lawton, head of manufacturing at BDO, added: “Official data shows a consistent downward trend in investment intentions since the EU referendum in 2016. The impact is severe, with UK manufacturing at risk of investment paralysis as the uncertainty of Brexit drags on. Companies need to prepare for a more digitally-fluent future, both in terms of the technologies they deploy and the people they employ, but right now manufacturers are not confident of a future worth investing in.

“Stockpiling is dying down and export orders continue to fall away as global competition keeps on increasing. Combine that with a government mired in chaos and we’re now starting to see a true reflection of the crippling anxieties the sector is facing.”

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