By Brexit Carnage editorial staff
Border chaos caused by the UK’s exit from the EU fuelled a slump in UK manufacturing last month, industry data out Monday showed.
Supply problems faced by manufacturers due to Brexit border red tape were among factors triggering the first fall in UK manufacturing output for seven months, according to the S&P Global UK Manufacturing Purchasing Managers Index survey for November.
The seasonally adjusted index dropped to a nine-month low of 48 during the month – from 49.9 in October and below the threshold of 50 indicating growth – following the biggest retrenchment in new orders since February.
Some firms said UK government Budget measures had caused manufacturers and their clients to review spending, while delivery times lengthened due to problems in securing supplies.
“In normal circumstances, rising demand for inputs drives longer delivery times, a positive signal, whereas recent supply-chain pressures have largely reflected external factors such as [Red Sea shipping disruption], border regulatory issues (including Brexit-related constraints) and North American port disruption,” S&P Global said in the report.
Concerns surrounding the UK economic outlook, high costs and weak demand caused lower output, falling orders and cuts to purchasing, jobs and stockholdings, S&P Global Market Intelligence director Rob Dobson said.
While companies of all sizes took a hit, small firms struggled the most, reporting particularly sharp drops in output, new orders and new export business.
“Meanwhile, supply-chain worries have intensified as the combination of the Red Sea crisis, port disruption and border regulation issues led to longer supplier delivery times, input shortages and rising costs,” Dobson said.
“With recent budget announcements on labour costs and employer National Insurance likely to raise costs further in 2025 and geopolitical tensions heating up notably around the threat of increased global protectionism, manufacturers are left facing an environment of high costs, low demand and increased uncertainty for the foreseeable future.”