The strength of the pound and a weakening global economy is having a significant impact on UK manufacturers, leading to a decline in demand for their goods overseas, according to a new report.
The Confederation of British Industry’s (CBI’s) latest study into the state of British manufacturing has revealed that companies in the sector expect output to fall over the coming three months – despite it having picked up recently.
The survey conducted amongst 458 manufacturing businesses found 20 per cent of manufacturers believed the level of their order books was above normal, while 32 per cent said it was below normal.
The rounded balance of -11 per cent was a small improvement on -18 per cent in October’s poll, but predictions for the next few months look much bleaker.
By comparison, only 11 per cent of firms said their export order books were above average, while 40 per cent said they were below, resulting in a balance of -29 per cent; the lowest level since January 2013.
“Poor export performance is weighing on the UK economy, as manufacturers are held back by a strong pound and a weakening global growth outlook,” said CBI economist Rain Newton-Smith.
The CBI has called on George Osborne not to cut back government support for exports and innovation.
“Furthermore, we would caution against the introduction of additional business costs that could hamper the competitiveness of UK manufacturers at home,” added Rain Newton-Smith.