JANUARY 2020 COVER STORY
17
THE START
OF THE DEAL
Boris Johnson’s signifi cant majority could fi nally
bring an end to the crippling uncertainty that has
gripped the sector in recent months
BY CHRIS BECK
www.manufacturingmanagement.co.uk
Economists across the world breathed
a sigh of relief on the morning of 13
December 2019. Not specifi cally because
Boris Johnson’s Conservative party had
swept to its biggest majority since the late
1980s, but because it marked the end of
an impasse. Businesses had spent months waiting
for answers around Brexit, the wider economic
downturn in the Eurozone and beyond, and the
trade tariff s imposed on some of the UK’s biggest
exports, including scotch whisky, cashmere and
luxury clothing.
This uncertainty was refl ected in the annual
Santander Trade Barometer 2019, which pointed
to a lack of confi dence amongst UK businesses –
especially SMEs. Just 56% of the 1,000 companies
surveyed (from a number of industries) said
they were confi dent their organisation will grow
in the next 12 months, down from 68% in 2018.
In addition, the six key indicators of business
confi dence (see chart, p19), such as hiring new
staff or introducing new products, were all
considerably lower than previous years. Brexit
(50%) and currency fl uctuations (48%) were cited
by many as risks to growth, highlighting that the
end to the uncertainty may not be in sight just yet.
This, says the report’s author, economist
and international trade and investment
policy specialist at Santander, Julia Ruotsi,
is demonstration that the turmoil of recent
years has had a signifi cant eff ect on business
performance. “Manufacturers are even more
concerned than most over the UK’s economic
prospects. They’re also concerned about EU
and global prospects to a higher level than any
other sector and are desperate for a satisfactory
conclusion to Brexit. We’re seeing that investment
within manufacturing businesses has plummeted,
although we’re seeing higher numbers for
product development and new recruitment.
Overall, though, anecdotal evidence suggests that
businesses are holding back and sitting on cash
due to the Brexit uncertainty.”
More evidence comes in
the shape of the Quarterly
International Trade Outlook,
published by the British
Chambers of Commerce (BCC)
and DHL. The most recent
report, released in November
of last year looked at Q3 of
2019, and found that exporting
manufacturers have undergone
a signifi cant decline. The
percentage balance of exporting
manufacturers reporting an
increase in export orders fell
to -1%, down from +9% in the
previous quarter. The balance
of those reporting increased
domestic orders fell to -4%,
down from +8%.
“A strong and balanced
economy needs healthy
exporters at its core,”
comments BCC director
general, Adam Marshall. “But
while there are some companies
bucking the trend, future sales
and orders are now well into
negative territory. Without
urgent clarity around our
future trading relationship
with the EU, fi rms across the
UK will increasingly struggle
to fi ll order books, and jobs
and prosperity in many of our
communities could be at risk.”
No hard borders
For one of the UK’s biggest
manufacturers, Tata Steel, the
uncertainty of recent years,
especially around Brexit, has
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