UK manufacturers have cut back on their growth expectations in factory output for 2023, citing huge uncertainty surrounding demand and energy prices.
Published today, the Q3 2022 Manufacturing Outlook report curated by Make UK and BDO forecasts growth for manufacturing of just 0.6 per cent in 2023, down from 1.7 per cent being forecast as recently as June.
GDP forecasts were also down to just 0.3 per cent from 3.6 per cent this year.
Seamus Nevin, chief economist at Make UK, and Richard Austin, head of manufacturing at BDO, said in a joint statement that employment growth is relatively strong, with employers expressing their intentions to continue hiring in the next three months.
However, the current recruitment rate is falling far short of what manufacturers intended to hire last quarter.
“This is a clear sign of labour and skill shortages in the workforce. As a result, overall investment intentions remain stagnant,” Nevin and Austin said in the report.
Export orders reported a balance of +3 per cent, which is a decline of 1 per cent from last quarter. This comes as international customers continue to grow on balance.
“Despite the weakness of the Pound, UK manufacturers have not been able to sell abroad more easily, partly because the high value-added nature of UK manufacturing means many firms sit in the middle of global supply chains so are less well-positioned to take advantage of relative devaluations in Sterling,” the report says.
MAKE UK also cited insights from international forecasters saying that Great Britain is more susceptible to recession and inflation than other Western economies due to its diminished global trade since Brexit.
“The IMF is among the groups predicting the UK could see the slowest growth and most painful inflation of any G7 economy in 2023, thanks, in part, to our relatively high reliance on fossil fuels, a big driver of inflation.”
