Britain’s manufacturers have grown more upbeat about their future prospects, helped by a reduced sense of global gloom.
Budget cuts in Greece and concerns about the impact of Brexit are also lessening the effect of global factors, according to a new quarterly survey of 230 industrial companies by the Confederation of British Industry published on Monday.
Last month’s cut to growth forecasts from the Bank of England adds to the optimism, with finance ministry data indicating that domestic demand has remained broadly unchanged since the end of 2017.
After three quarters of falling output and unprecedented pessimism about the future, UK manufacturers are increasing their optimism, the CBI said.
“A shade brighter mood among manufacturers provides a glimmer of hope as Brexit stands between them and a sustainable recovery,” said David Buik, market analyst at Panmure Gordon.
The Confederation also raised its forecasts for economic growth this year. It expects the economy to expand 1.4 per cent in 2019, up from its September forecast of 1.3 per cent. Last month the Bank of England, which had lowered its forecasts at the autumn’s quarterly inflation report, forecast growth of 1.1 per cent.
Over the first half of 2019, the trade body predicts the economy will grow at a rate faster than the expansion of the overall economy, while business investment is expected to remain strong.
However, this is largely driven by above-average levels of exports. Alongside the greater optimism, the CBI is reporting a fall in inventories. “Today’s comments of almost all firms we spoke to today say that order books are too low to sustain a robust rate of growth in output and plant,” the CBI said.
The big concern for the CBI remains the government’s post-Brexit trade negotiations. As part of the fall in manufacturing output over the past three quarters, export orders have fallen for the first time since early 2009, and sales in overseas markets have also declined.