UK Manufacturing Faces Perfect Storm: 12 Months of Contraction
The UK's manufacturing sector is grappling with a perfect storm of challenges, with the latest PMI showing a contraction for the 12th consecutive month. This follows a year-long decline in business activity, as businesses face rising costs, tariff uncertainty, and market pressures.
The sector's woes are evident in the closure of the bioethanol factory in Humberside, forced shut by cheap American imports. Meanwhile, British Steel, rescued by the government in 2019-2020, now faces renewed pressure from US tariffs, with ministers stepping in to assist. Job losses have been 'marked' for 11 months, with employment numbers falling consistently.
The decline in new orders can be attributed to subdued confidence, tariff uncertainty, and increased energy and staff costs. Major German steel companies like Salzgitter AG and thyssenkrupp are also feeling the heat, struggling with rising energy costs and uncertain economic conditions. Salzgitter has even postponed some green investments due to these challenges. The cyber attack on Jaguar Land Rover has added to the turmoil, disrupting its supply chain and affecting other firms. The company expects manufacturing to restart in the coming days but warns it may take up to a week.
The Lindsey oil refinery in Lincolnshire fell into administration in June, further highlighting the sector's struggles. With the decline in manufacturing activity lasting for a full year, urgent action is needed to bolster confidence, address tariff uncertainty, and support businesses through these challenging times.
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