The CBI has stepped up its campaign for the UK and the EU to strike a compromise Brexit deal after its latest snapshot of manufacturing showed the pace of output growth slowing.
Despite stronger order books the employers’ organisation said industry was struggling to cope with the twin impact of slower global growth and uncertainty about Britain’s future relationship with the EU 27.
The CBI’s monthly industrial trends survey painted a rosier picture than official data which showed manufacturing was in recession during the second half of 2018, suffering two successive quarters of negative growth.
The CBI’s February survey showed 24% of firms reporting order books above normal for the time of year, against 19% saying they were below normal. The rounded balance of six percentage points compared to minus one point in January.
By contrast, 27% of firms said they had increased production over the latest three months while 20% said they had cut output. The balance of plus seven points was down from plus 16 the previous month. During the next three months – a period that includes the date set for Brexit – firms said they expected output to grow at a similar pace.
Anna Leach, CBI head of economic intelligence, said: “UK manufacturing activity has moderated at the same time as headwinds from Brexit uncertainty and a weaker global trading environment have grown.
“The time for Brexit compromise to support the UK manufacturing industry is now. The clock is ticking quickly towards crisis point. It is of critical importance that politicians of all stripes and on both sides of the channel come to agreement on the terms of a Brexit deal as soon as possible, to allow our manufacturers to continue to create, make and trade their goods with certainty.”
Output expanded in nine of the 17 industrial sub-sectors monitored by the CBI, with the strongest performance reported by chemicals, food and drink and tobacco. The motor vehicles and transport equipment and mechanical engineering sub-sectors were the main drags on growth, the CBI said.
Howard Archer, chief economic adviser to the EY Item Club said it was “an overall better-than-expected CBI industrial trends survey that points to the manufacturing sector being relatively resilient in February despite a lacklustre domestic economy, a weaker global economic environment and heightened Brexit uncertainties”.
