UK factories are facing the biggest slowdown since the 2008 economic crisis, according to the CBI.
Blaming a perfect storm of Brexit uncertainty and a slowdown in global trade, the employers’ organisation said industrial output fell in the latest quarter, for the first time since the spring of 2016.
Noting that the announcement was made “a few minutes before the new Tory leader was officially announced,” Sky News says the new data “highlights the economic challenges facing Boris Johnson”.
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“Ouch,” says The Guardian, adding that the data “may intensify concerns that Britain is heading into recession”.
Having interviewed 291 manufacturing firms, the CBI found that total new orders fell at the quickest pace since January 2012, powered by the fastest falls in domestic and export orders since 2008.
Business sentiment has also deteriorated at the quickest rate since just after the EU referendum and investment intentions have slumped when compared to the last quarter.
For July alone, the CBI’s quarterly industrial orders index fell to -34 from -15 in June. The median forecast in a Reuters poll of economists had been for another reading of -15.
The CBI’s chief economist, Rain Newton-Smith, said: “As the tailwind from stockpiling weakens, clouds are gathering above the manufacturing sector. It’s being hit by the double blow of Brexit uncertainty and slower global growth.”
She added that “it’s crucial for the new prime minister to secure a Brexit deal ahead of the October deadline” and “get on with pressing domestic priorities, from improving our infrastructure to fixing the apprenticeship levy”.
Meanwhile, Carolyn Fairbairn, the CBI director general, said: “On Brexit, the new prime minister must not underestimate the benefits of a good deal. It will unlock new investment and confidence in factories and boardrooms across the country.”
