UK manufacturers report worst monthly performance in six years amid Brexit fears Stockpiling and fall in export orders provoke demands for action to restore economic confidence

Manufacturing output in the UK has slumped to its lowest level in six years as uncertainty caused by Brexit threatens to bring the economy to a standstill.

A monthly index of factory production showed that many firms are scaling back orders and relying on stockpiles built up ahead of the original Brexit deadline in March, which had provided an artificial boost to the economy.

Business leaders warned that whether it is Boris Johnson or Jeremy Hunt, the next prime minister needed to introduce “swift and tangible” measures to restore economic momentum. Separate official figures confirmed a slump in sectors from diesel vehicles to leather goods.

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Many companies had rushed to build up reserves of goods and materials to weather any disruption in the event that the original 29 March Brexit deadline had resulted in a no-deal departure.

Export orders

The passing of that deadline with a further extension has seen firms now running down those reserves amid a pessimistic outlook for the coming months.

The figures produced by IHS Markit and the Chartered Institute of Procurement and Supply (CIPS) showed that activity levels in manufacturing fell to their lowest level since February 2013. The index fell to 48 – a figure significantly below City expectations and below the 50 mark which denotes the dividing line between economic growth and contraction. New export orders also fell for the third month in a row.

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Duncan Brook, group director of CIPS, warned manufacturing was heading for a further decline unless the lack of clarity surrounding Brexit is resolved shortly. He said: “The sector’s strength is slowly slipping away, deprived of the oxygen of a reduction in Brexit uncertainty and an associated return of confidence to the marketplace.”

Separate figures produced by the Office of National Statistics showed a 2.5 per cent rise in the value of sales for manufacturers in 2018 to £390bn. Food production saw the highest rise in sales, increasing by nearly £2bn to £72bn.

Diesel vehicle sales

But the figures also showed sharp falls in important sectors, in particular diesel vehicles where sales fell by more than a third to £6.4bn. Sales also fell in segments from the manufacturing of trailers to leather goods.

Business leaders said that a further poll of manufacturers conducted by the British Chambers of Commerce (BCC) suggested that the economy is in danger of stalling and growth in the second quarter will be “minimal”.

Adam Marshall, director general of the BCC, said: “The next prime minister must take swift and tangible steps to inject momentum and confidence into the UK economy. Businesses want to see concrete and deliverable plans to tackle barriers to growth… avoid a messy and disorderly Brexit, and restore the UK’s global reputation as a place to invest and trade.”