Brexit uncertainty impacting over a third of manufacturers

Posted on 1 Jun 2016 by Jonny Williamson

Uncertainty regarding the outcome of the forthcoming EU referendum and concerns over a possible Brexit is having a detrimental impact on the business performance of more than a third of UK manufacturers, according to a new survey.

Blue Cartography Of European Union with Business Silhouettes
The referendum to decide whether Britain should leave or remain in the European Union will be held on Thursday, June 23 – image courtesy of Shutterstock.

Responding to a special question added to the May Markit/CIPS UK Manufacturing PMI survey, some 27% of the more than 420 companies polled indicated that the UK’s potential exit from the European Union (Brexit) was having a ‘detrimental’ effect on their business.

While a further 8% revealed that the impact was ‘strongly detrimental’.

Conversely, just 3% reported a ‘beneficial’ impact, while around 1% indicated a ‘strongly beneficial’ effect. More than half (51%) noted no significant impact.

Regards the types of difficulties manufacturers were facing, nearly a quarter of respondents commented that Brexit ‘uncertainty’ was making it difficult to make business decisions; which in turn was adversely impacting on their sales.

At 30%, costs were also being adversely affected, with a similar proportion also highlighting a detrimental impact on profits. Investment and planning decisions were also being hampered.

You can read more about the latest Markit/CIPS UK Manufacturing PMI survey, with industry commentary, here.

In stark contrast, nearly 80% of those surveyed reported no significant effect arising from uncertainty over Brexit and their ability to hire suitable staff.

The latest Markit/CIPS UK Manufacturing PMI (May 2016) indicated that UK manufacturing had edged back into the black – creeping over the neutral growth mark of 50.0.

Though with a score of just 50.1, UK manufacturing has continued its “generally lacklustre” start to the year.

The previous PMI (April), saw figures dip below the critical no-change gauge of 50.0 for the first time in more than three years. The score of 49.2 was chalked up to a decline across both production and new orders.

CEO at the Chartered Institute of Procurement & Supply (CIPS), David Noble noted: “It is likely some manufacturers are maintaining a financial shield as a barrier against the uncertainties still affecting the sector, including those arising from the forthcoming EU referendum.”