Woe for manufacturers casts cloud over UK growth hopes

The UK economy is heading for one of its worst performances since the Brexit vote as a manufacturing malaise saps growth, downbeat official figures revealed on Friday.

November’s 0.4% output slide for a sector employing 2.9 million and accounting for around 10% of the economy is its fifth monthly decline in a row, marking the worst run for the sector since the financial crisis a decade ago.

The weakness dragged the pace of the overall economy down to 0.3% in the three months to November, offsetting the heavy Black Friday discounts which helped overall GDP in November alone rise 0.2%, according to the Office for National Statistics.

With more tepid growth likely in December the economy could eke out growth of just 0.3% in the final quarter, the worst since the referendum period barring snow disruption a year ago.

While services and a volatile construction sector are still growing, manufacturers have struggled despite the fall in the pound since the referendum as Brexit uncertainty saps confidence amid doubt over future trading arrangements.

Carmakers Jaguar Land Rover and Ford have revealed thousands of job cuts while Honda has announced a six-day shutdown in April. Today’s data showed car production, also suffering from lower demand for diesel cars, falling 2.4% in the three months to November.

The EEF manufacturers’ organisation economist Francesco Arcangeli said: “The sector, which is crucial for several manufacturing sub-sectors in the country, appears to be in a very weak spot and it would appear the knock-on effects are now having significant consequences for the supply chain.” The gloomy UK figures come amid a welter of bad news on manufacturing across Europe.

Italian industrial production tumbled 1.9% in November, almost certainly enough to push Italy into recession, following disappointing figures from France, Germany and Spain.

There was better news on the UK’s overall trade deficit, which fell slightly to £2.9 billion. But City economists predicted the economic news would get worse as the UK moves closer to an EU exit on March 29.

Capital Economics economist Paul Dales said: “It is possible that growth will slow further in Q1, as that is presumably when the Brexit uncertainty will be greatest. What happens next depends on Brexit. But at some point the pent-up investment and consumption demand will be released.”