UK factories take fright as budget adds to cost pressures, survey shows
LONDON, Dec 16 (Reuters) -British manufacturers have reported the sharpest loss of confidence since the start of the COVID-19 pandemic in the face of higher costs including tax increases by the new government, a group representing the sector said on Monday.
Make UK said its gauge of manufacturers' confidence about the economic outlook over the next 12 months in its quarterly outlook survey dropped to 5.8 in the fourth quarter of 2024 from 6.8 three months earlier.
The group cut its forecast for manufacturing output in 2024 which it now expected to shrink by 0.2% this year, down from a previous forecast of 0.5% growth. The sector was likely to expand by 0.7% in 2025, half the rate of the broader economy, it predicted.
Output and orders were positive while recruitment and investment intentions remained stable, Make UK said. But the mood among manufacturers worsened from the previous survey when almost six in 10 companies were upbeat about the outlook.
"Having faced a cost creep for most of the year, manufacturers are now facing a cost crisis which has brought a sharp dip in their confidence," Fhaheen Khan, senior economist at Make UK, said.
British finance minister Rachel Reeves announced in her Oct. 30 budget a 25 billion pound ($32 billion) increase in social security contributions paid by employers which will take effect from April, which is also when the minimum wage is due to rise by almost 7%.
Other recently published surveys have shown a drop in hiring intentions by employers following the budget.
Official data published on Friday showed Britain's economy shrank in both September and October in the run-up to the announcement by Reeves of her tax and spending plans - the first back to back declines in gross domestic product since 2020.
The survey of 303 companies was carried out between Oct. 28 and Nov. 27.
($1 = 0.7923 pounds)
Writing by William Schomberg; editing by David Milliken
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
