A “cloud of uncertainty” hovers over British industry as a survey of manufacturers finds optimism has fallen and investment intentions have dropped off since the Brexit vote.
In its quarterly Industry Trends Survey, the Confederation of British Industry (CBI) found manufacturing output and domestic orders grew over the last three months.
But despite the apparent uptick manufacturers are pessimistic about the future and feel constrained by the political and economic situation, the survey found.
The survey found on balance 16% of firms saw output grow 16% over the last three months and 9% saw order volumes increase
Last week a Markit/CIPS flash poll of buyers found a contraction in both manufacturing and services following the Brexit vote.
The CBI poll of 506 manufacturers found employee numbers were up, domestic orders were up and exports remained steady.
However, in the aftermath of Britain’s vote to leave the EU, the CBI said optimism fell at its fastest pace since January 2009, the height of the financial crisis.
“Manufacturers picked up the pace over the second quarter, with output growing solidly… But it’s clear that a cloud of uncertainty is hovering over industry, post-Brexit. We see this in weak expectations for new orders, a sharp fall in optimism and a scaling back of investment plans,” said Rain Newton-Smith, CBI chief economist.
Optimism over the general business situation was down 47% and optimism over export prospects fell 11%.
Manufacturers’ investment intentions were also down compared to the last 12 months in both buildings (down 23%) and plants and machinery (down 5%).
The survey also found the number of firms citing political and economic conditions as a constraint on export orders over the next quarter was up 53%, the highest in 30 years.
“It’s important now for the new government to steady the ship with a plan, and a clear timetable, for negotiating the UK’s relationship with the EU. This, along with a renewed focus on industrial strategy, will help give firms the confidence they need to grow and create jobs,” said Newton-Smith.
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