On the face of it, we should all be celebrating the recent upsurge in Britain’s manufacturing output. The Office for National Statistics reported a 2.2% increase over the first three months of 2019, the strongest quarterly performance since 1988. Further evidence of the trend was provided by Trading Economics (TE) which reported that the 2.6% year-on-year rise in UK factory activity in March was the highest since November 2017. On a quarterly basis, TE calculated factory output had shot up by an even more remarkable 5.1% in Q1.
Based on the more cheery outlook, the Bank of England raised its GDP growth forecast for this year from 1.2% to 1.5%. The Chancellor of the Exchequer immediately seized on a good news opportunity, trumpeting about the robust UK economy. And just as predictably, Labour’s Shadow Chancellor was quick to say that there was very little to boast about.
Those of us living in the real world don’t have the luxury of playing politics – we still have businesses to run. What we know for certain is that the prospect of Britain walking away from the EU at the end of March was the driver behind many firms increasing their orders to boost stock levels. It follows that now Brexit has been deferred until October 31 this year, those same companies may now be sitting on an excess of stock and the debt they unnecessarily took on to finance their course of action.
Fortunately, UnitBirwelco is not in this position, but the question remains as to whether the statistics have painted a false picture. Crucially, will the next two quarters see the pendulum swing in the opposite direction, with factory output falling due to a drop in orders because of over-stocking? What would that do to the economic predictions?
Surely no one can doubt that the whole Brexit saga has created havoc for a business community uncertain as to how to plan for the future. Who knows, Brexit – if it ever happens – may in time create opportunities for UK companies? However, while we wait, perhaps the estimated two-thirds of British people who do not understand the importance of the manufacturing sector should be told that it accounts for 11% of the country’s goods and services, employs 2.9m workers (although some estimates differ) and that the UK remains the world’s eighth largest industrial nation.