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UK manufacturing stalls due to Brexit and lockdowns

Business expectations have improved

UK manufacturers paid the price of supply chain disruptions in February as lockdowns and Brexit caused a dip in production levels.

The latest figures from the IHS Markit/Chartered Institute of Procurement Supply index for manufacturing output revealed a fall to 50.5 this month, the lowest point since May.

Britain’s departure from the single market and customs union led to the erection of barriers between the UK and the bloc. PMI (Purchasing Manager’s Index) data has previously highlighted the short-term impact of the new agreements.

The data showed that UK manufacturing sales fell, while respondents to the survey divulged “difficulties fulfilling orders to existing clients in the EU due to higher costs and transportation delays”.

James Brougham, a senior economist at Make UK, the manufacturing industry trade body, outlined the combined impact of Brexit and the pandemic on the sector.

“The compound effects of continued Covid-19 related disruption now exacerbated by manufacturers’ cautious navigation of the new UK-EU trading arrangement has created a scenario in which logistical and supply-side challenges are limiting the rate of economic recovery for the sector,” he said.

On the other hand, the PMI figures showed business expectations for the year ahead improved in February, as the roll-out of vaccines is expected to generate a rebound effect on the economy.

Despite the slowdown in manufacturing made solid gains on Monday amid expectations that Rishi Sunak will upgrade forecasts on the UK’s economic recovery from Covid-19.

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