The firm’s Manufacturing Index, which tracks business output growth in the sector, fell by 0.23 points to 98.37 points in January – the lowest recorded since October 2017.
This fall in production came despite manufacturers ramping up preparations in anticipation of the UK crashing out of the EU without a deal, including reports of stockpiling by major players such as Greencore, Mondelēz and Nestlé.
Masking bigger issues
BDO questioned whether the recent uptake in stockpiling activity was masking a greater fall in output than suggested by the figures.
January also saw business confidence suffer a significant decline – not helped by MPs crushing Theresa May’s EU withdrawal bill, creating more uncertainty.
BDO head of manufacturing Tom Lawton said many of the businesses he’d talked to had been stockpiling goods in order to deal with the uncertainty and immediate fall-out of a no-deal Brexit, but did not have the premises or funding available to do so to any great extent.
“The Government needs to take action. For the past 30 plus years, politicians have consistently underestimated the importance of manufacturing to the economy and the debacle that is Brexit shows that they have still not made progress in that regard,” he added.
“Politicians must stop playing party politics and turn their attention to helping these businesses that form the foundations of our heritage and economy.”
Meanwhile, food and drink manufacturers have reported more negative impact from Brexit than any other business sector in the UK, according to a new report.
The survey of 755 businesses leaders by global credit company Creditsafe found that 60% of surveyed food and drink businesses had been hit negatively by the UK’s exit from the EU already.