Manufacturers slash production forecasts for 2021

By James Ridler contact

- Last updated on GMT

Manufacturing output fell in 2020, but forecast to bounce back in 2021
Manufacturing output fell in 2020, but forecast to bounce back in 2021

Related tags: Brexit

UK manufacturers have slashed their forecasts for growth next year amid fears of a no-deal Brexit, as food and drink output drops in 2020, according to Make UK.

Manufacturing output is set to drop 12% this year, according to a new survey from the organisation and business advisory firm BDO. Output for 2021 was slashed from 5.1% to 2.7%,

The food and drink industry – the UK’s largest manufacturing sector – saw output drop 5% in 2020, thanks mainly to the mass closure of foodservice and hospitality in the wake of the coronavirus pandemic. Employment across the industry took a slight dip of 0.4%

Output to rise in 2021

Make UK forecast recovery in 2021, with output and expected to rise 2.3%. However, employment was predicted to drop 2% next year.

The organisation warned that should the UK leave the EU with no trade agreement in place then this forecast may be revised further – given the potential for significant damage to manufacturing.

Stephen Phipson, Make UK Chief executive, said: “Manufacturing has stepped back from the abyss that it stared into earlier in the year. But, make no mistake it is going to be a long haul back, with talk of a V shaped recovery nothing more than fanciful.

‘Knockout blow’

“However, having endured over four years of political turmoil, combined with the pandemic many in industry are feeling like an exhausted boxer in the final round of a bout, with a ‘no deal’ exit from the EU potentially landing a knockout blow.”

Should the UK be faced with a no-deal exit, any hope of recovery for manufacturing would likely go into reverse, with job losses likely to come in its wake, Phipson warned.

“It is essential that the first step towards a fuller recovery is provided by a comprehensive tariff and, quota free, trade agreement with the EU, with a sensible range of easements to allow business some time to adapt,”​ he added.

Meanwhile, UK food and drink exports fell by 12.9% to £15.2bn in the first nine months of 2020,​ as manufacturers struggled with the coronavirus pandemic and uncertainty surrounding the end of the Brexit transition period.

Related topics: Brexit, Operations

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