Wednesday, 20 July 2016

Brexit: and jobs and manufacturing in the South West

Unemployment is increasing in the South West - as shown by figures out today:
South West unemployment on the rise | Business West

There were concerns about job losses from the TUC before the referendum:
TUC says Brexit will mean South West job losses | Plymouth Herald

Since the vote, there have been concerns for the SMEs of the UK economy - and groups such as Business West speak of a “big sense of shock” as the early implications of the result sink in — and draw clear policy implications:
Brexit uncertainty starts to affect small British businesses - FT.com
Business West Reaction to the EU Referendum | Business West

There are also new concerns about job creation from the Chambers of Commerce:
Will job creation decline after Brexit vote? | Plymouth Herald

And now the EEF, the manufacturers’ organisation and "the voice of UK manufacturing and engineering" has spoken about its concerns over Brexit:
How are manufacturers feeling about Brexit? | EEF

This is from yesterday's Express and Echo:

Negative outlook for South West manufacturers after Brexit vote

By GRichardson | Posted: July 19, 2016

Jim Davison, EEF's South West director

Manufacturers' confidence in the UK economy and their own business performance has been knocked by the vote to Brexit, according to a new survey.

The research from EEF, the manufacturers’ organisation, found that while firms report little immediate impact on trading conditions, the outlook for the next six months shows signs of decline. Forecasts now point to the sector remaining in recession until at least the end of 2017.

Jim Davison, South West region director at EEF, said: “Rather than an immediate storm, it is clear that manufacturers see the real risks from the referendum outcome presenting over the next six months to a year.

“While many are acutely aware that we are still in the early days, exchange rate volatility, political uncertainty and the danger of increased costs are already on their risk radar and subsequently we can already see confidence starting to drain away.”

He added: “The post-referendum drop in the value of sterling has been helpful to some manufacturers, but the overall impact is too nuanced for it to be glibly hailed as the hero of the piece.

“The opportunities it presents must be weighed against the three quarters of manufacturers who see exchange rate volatility as a key risk in the next 12 months and the third of firms that have already seen input costs rise. In the next six months, over half of manufacturers expect input prices to increase and that probably tells you everything about why the drop in sterling is a double-edged sword.

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“All of our forecasts now point to our sector remaining in recession until at least the end of 2017. This means that, more than ever, we need Government to keep a firm and steady hand on the tiller. This means providing a stable business environment, scrapping burdensome policies and planned levies that add to our costs and reinstating a long-term national industrial strategy.

“The Government cannot wipe away the risks that Brexit will cause, but it can provide manufacturers with the reassurance and confidence to invest and seek growth from Brexit’s opportunities.”

More than 80 per cent of manufacturers said their order intake is so far unchanged since the referendum or it’s too soon to say what the impact has been, though some reported a drop in orders from both the UK and the EU.

But demand conditions in the next six months are expected to be weaker. The biggest concern appears to be demand from UK customers, with 29 per cent of firms bracing themselves for UK orders to decline.

EU orders are also at risk, with a balance of 12 per cent of companies predicting a decline, exactly matched by those expecting non-EU orders to increase.

The survey shows that confidence for the 12 months ahead has tumbled, both in terms of firms’ faith in the UK economy and in their own business performance.

Exchange rate volatility is a concern for three quarters of manufacturers. Other risks on their radar are political uncertainty (65 per cent), expectations of increased costs (59 per cent) and weaker demand (49 per cent).

On the flipside of the Brexit coin is opportunity. Chief amongst these for manufacturers is the subsequently weaker pound, with just over half of firms seeing this as an opportunity.

At the same time, a third of manufacturers have already seen input costs rise, with around half expecting this to be the case over the next six months.

Taking all of the risks, opportunities and uncertainties into account, 58 per cent of firms say they will be reviewing their UK recruitment and 57 per cent will be reviewing UK investment. Just under four in 10 firms expect to be investing less in the UK over the next year.

Negative outlook for South West manufacturers after Brexit vote | Exeter Express and Echo

See also:
Economy stutters as Brexit fallout takes hold - Telegraph

Futures Forum: Brexit: and the future for business in the South West
Futures Forum: Brexit: and commercial property in East Devon
Futures Forum: Brexit: and Local Enterprise Partnerships in the South West
Futures Forum: Brexit: and the economy in the South West

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