Jay Boss
UK Manufacturing Output Plunges Amid Weak Demand
The Confederation of British Industry (CBI) reports a sharp decline in UK manufacturing output during the final quarter of 2024, marking the fastest pace of contraction since mid-2020. This downturn is attributed to a combination of weak domestic and international demand.
Key findings from the CBI’s Industrial Trends Survey include:
- Output Slump: Manufacturing output experienced a significant drop in the three months to December, with expectations for further decline in the coming quarter.
- Order Book Weakness: Total and export order books deteriorated sharply, with order volumes reaching their lowest levels since late 2020.
- High Inventory Levels: Finished goods inventories remain elevated, a situation reminiscent of the early stages of the COVID-19 pandemic.
- Selling Price Inflation: Despite weak demand, manufacturers anticipate a rise in selling price inflation over the next three months.
Factors Contributing to the Decline:
- Weakening External Demand: Political instability in key European markets and uncertainties surrounding US trade policy are impacting export orders.
- Domestic Business Confidence Crisis: The recent budget has negatively impacted domestic business confidence, leading to project cancellations and a decline in orders.
CBI Recommendations:
The CBI urges the government to implement measures that can boost business confidence and support investment. These include:
- Flexibility in Apprenticeship Levy: Allow businesses greater flexibility in utilizing the apprenticeship levy.
- Business Rates Reform: Accelerate the timetable for reforming business rates.
- Long-Term Industrial Strategy: Develop a comprehensive and long-term industrial strategy to signal to markets and investors that the UK is a competitive business destination.
This report highlights the significant challenges facing the UK manufacturing sector and underscores the need for government intervention to support businesses and stimulate growth.
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