A devalued sterling and a buoyant global economy had driven strong growth in British manufacturing – exhibiting a good performance in the last 12 months. But the danger pints for the coming year are uncertainties over Brexit and the U.S. trade war, says an analysis from EEF, the manufacturers’ organization.
The roadblocks for the British manufacturing industry next year include the relatively weak investment scenario because of Brexit uncertainty, the rising global trade tensions and the threat of a no Brexit deal which w\could disrupt the growth buoyancy.
“We have had a good year of growth reflected in all the regions,” EEF chief economist Lee Hopley told the media.
“The drivers of that growth are the pick-up in the global economy, improvement in commodity prices and an increase in investment around the world — that means all sectors have had improved output and improved order books.”
But there had been not enough investments commensurate with the strong demand in orders and exports, Hopley said.
“Caution has been the watchword over the past year as we continue to operate with a real lack of clarity about the Brexit end game,” she said.
The weakening of the sterling right after the completion of the Brexit vote was a benefit for some exporters, Hopley said but that advantage was lost during the end of the current 12-month period.
“The devaluation after Brexit has been a benefit for many exporters, not all, but towards the end of the year that benefit has been fading,” said Hopley.
There are a number of regions in the country that are very vulnerable to a no deal Brexit because those regions have significant exposure to the EU in terms of exports. Those regions include the Wales – where nearly two thirds of all manufactured products are exported to Europe, the North East w3hiuch exports almost 60 per cent of its manufacturing, the East Midlands with 54.9 per exports to the EU and East of England which about 52.5 per cent manufactured products going to the EU.
Hopley said: “Brexit is a key uncertainty. There is varying exposure to EU markets depending where you are in Britain. The impact, from a trade point of view, depends on where you are in the country but Brexit uniformly weighing on investment intentions, and that is a weak point in our survey across all parts of the country in the past year.”
Among the other regions, the North West has a significant exporter to the Middle East and North Africa, while the West Midlands are significantly linked through exports to Asia, Oceania and the U.S.
The increasing trade tensions is compounding the uncertainty about Brexit after the 2019 deadline gets over. The US tariff war can impact metal manufacturers in the West Midlands and Yorkshire and Humber which is a cause of concern for the over al manufacturing industry in the country.
“There are risks of escalating trade tensions prompted by U.S. actions. The metals industry, especially in Yorkshire and Wales, might be affected. And if the U.S. tariffs hit automotive industries across Europe that will hit the Midlands and the North West of England,” said Hopley.
(Adapted from Xinhuanet.com)