Make UK/BDO survey reveals exports slump to lowest level in three years
17 Mar 2020
Britain’s manufacturers are calling on the Government to work with industry and take whatever steps to mitigate the impact of coronavirus on supply chains on the back of a survey showing exports have slumped to their lowest level in three years.
A snap poll of 112 companies conducted by Make UK between 29 January–19 February showed that over a third of companies (36%) say EU customer sentiment has worsened since exiting the EU, indicating European customers are now looking away from the UK, further threatening exports to the UK’s major market.
Previously the Q1 Manufacturing Outlook survey published by Make UK and business advisory firm BDO LLP, confirmed the sector had ground to a standstill at the end of 2019 as the stockpiles from a potential October EU exit wound down.
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.
Seamus Nevin, chief economist at Make UK, remarked: “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 firms should prepare for further volatility as coronavirus fears take hold, with the impact on the sector’s crucial supply chains still largely unknown.
“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,” he cautioned.
According to the Make UK/BDO survey, total orders improved from +1% in Q4 2019 to +4% in Q1, though compares poorly with 2017 which peaked at +37%.
Total orders in Q1 (up to +4% from +1%) reflect the slightly improved picture for domestic orders, although they have still remained negative for three successive quarters which is the worst run since 2015 (-3% from -5%). Export orders deteriorated significantly from +10% to -2%, the first time export orders have been negative since the final quarter of 2016.
Northern Ireland’s low level of business confidence, reflected the uncertainty over future trading arrangements, said Make UK. given its exposure to the EU and the fact that manufacturing is a higher than average percentage of the Northern Ireland economy – standing at 15.2% compared to 10.1% for the UK overall.
Photo: Automation companies such as Fanuc have helped improve productivity thanks to the introduction of smart machines but Brexit and the Coronavirus epidemic have brought new pressures says Make UK
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