Concerns of UK manufacturers regarding shortage of low-wage workers and supplies have risen the most in nearly 50 years, according to a survey by the Confederation of British Industry (CBI), which recently said a measure of how manufacturers feel about their competitiveness relative to European Union (EU) rivals deteriorated at the fastest pace on record.
British companies expected output and orders to decline, CBI said. “Manufacturers across the board are continuing to battle major headwinds,” CBI chief economist Rain Newton-Smith said. Manufacturing accounts for about 10 per cent of Britain’s economy. A monthly index of new orders for January dropped to minus 38 from minus 25 in December, and a quarterly measure of optimism sank to minus 22 from zero in October.
However, export orders bucked the broader trend, with this balance rising to its least negative since March, though it was still below its long-run average.
The survey adds to signs that Britain’s economy will contract in early 2021, hit by a surge in coronavirus cases and restrictions, and new bureaucracy for trade with the EU.
The much bigger services sector has been hit far harder by social-distancing measures and is also facing new barriers to trade with the EU.
A new experimental measure of consumer spending indicated that credit and debit card spending in early January slumped to 35 per cent below its level last February, before the pandemic.
The figures, published by the Office for National Statistics using Bank of England data, are not seasonally adjusted, so part of the fall probably reflects a normal drop in spending after Christmas, on top of the impact of new COVID restrictions which closed non-essential retailers this month.
The CBI figures showed many manufacturers reported a rush to build up stocks and complete EU orders in December, before the new customs rules took effect on January 1.