Manufacturing exports slumped to the lowest level in three years even before the coronavirus crisis hit the UK, as EU customers turned away from British businesses after the UK left the bloc in February.
Export orders for British manufacturers turned negative for the first time since 2016, according to a report by Make UK, the trade organisation for the manufacturing industry, sending sector output sharply lower in the first quarter.
Make UK has downgraded its forecast for manufacturing output this year and is expecting a drop of 2.1 per cent, having previously been predicted to grow at about 0.3 per cent. The trade group said the figure may have to be revised further given the impact on manufacturing from the rapid spread of coronavirus.
Seamus Nevin, chief economist at Make UK, said: “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.”
Make UK has called on the government to work closely with manufacturers to mitigate the impact of coronavirus on the sector.
Its revised guidance came ahead of a government call for manufacturers to help support the efforts to tackle the spread of coronavirus by making equipment that can help treat the virus.
While some factories in countries such as Italy have been closed, manufacturers in the UK have so far kept production open even though many companies have started sending office workers home to isolate from the virus.
Make UK’s survey shows that the sector was already in decline ahead of the rapid spread of coronavirus. In a survey conducted with BDO, the accountancy firm, Make UK said that manufacturing output had fallen sharply on the back of weak orders and as stockpiling of parts ahead of the threatened no-deal Brexit in October wound down.
In a poll of manufacturers, over a third said EU customer sentiment to their businesses had worsened since exiting the EU.
The survey was taken before the recent market upheaval, but already showed that the sector had ground to a standstill at the end of 2019.
Make UK said that beleaguered sectors such as steel remained the weakest, but flagged new concerns over previously buoyant areas such as electronics, where orders turned negative for first time since 2015.
The group said that this was because access to semiconductors and other components needed in the manufacturing sector had become more difficult, as Chinese factories had shut down in response to the coronavirus outbreak in the country in early January.
Tom Lawton, head of manufacturing at BDO, said: “As coronavirus fears take hold and the impact on the sector’s crucial supply chains remains largely unknown, businesses should be preparing themselves for more volatility this year.”
