UK Factory Exports Struggle Under Ongoing Brexit Uncertainty

Monday, June 17th, 2019

Fears have continued to grow over a disorderly Brexit. These concerns have only increased and become more complicated with Prime Minister Theresa May’s announcement that she would be quitting as party leader on June 7th. Her resignation comes after facing massive criticism for failing to deliver her flagship policy over leaving the European Union – also missing not one, but two Brexit deadlines.

As a result, UK manufacturers’ exports declined at the second-fastest rate in four and a half years in April amid a slowdown in factory output. The two delays in Brexit have definitely caused complications for the industry. First, was the initial rush in stockpiling activity to prepare for the original 29 March Brexit deadline.

Then, the deadline was pushed until October 31. This caused weaker economic growth, following the incredible rush to build supplies of raw materials and finished goods the beginning of the year. A recent analysis confirmed that Brexit was the main reason for the slowdown, with fading demand from the EU, US and China. Weaker growth in the world economy also took its toll, seriously reducing the number of orders from overseas clients.

Duncan Brock, group director at Cips, commented that “As Brexit prevarication continued, overseas clients took to action and found new supply-chain routes away from the UK.”

“The mild rise in domestic orders was unable to meet this significant shortfall in business, and with the extended Brexit deadline, the levels of stockpiling slowed.”

In recent months, there has been some progress. However, trade tensions between the US and China have created a huge speedbump for the world economy, as President Trump used higher tariffs to force better trade terms from Beijing. His threats to other major trading partners, including the EU, also raised tensions.

Impact on Manufacturers

Economists have shared that UK economic growth could slow further over the coming months. They explain that companies will likely run down their stocks built up over recent months, rather than place new orders.

Even so, one in five manufacturers say they still plan to store up supplies; many are still concerned and trying to prepare for the unknowns of Brexit. Analysts have also said that the failure to resolve Brexit could lead overseas companies to continue sourcing their goods from other countries.

Francesco Arcangeli, economist at the manufacturers’ lobby group Make UK, says, “This slower output is also a reflection of increasingly weak demand and growing job losses. Demand from overseas has been hit particularly hard with several overseas customers reducing their British supply chains to divest themselves of their reliance on the UK market.”

Merchants Seek Help to Prepare

One of the ways manufacturers and other businesses are preparing for Brexit is taking a close, honest look at their business processes; this includes their payment processing services. If you are one of the many business owners worried about the impact of Brexit, consider the industry updates and reviews Best Payment Providers has to offer. Quickly browse through helpful tips and information like cheapest merchant services.