UK Manufacturers Hit by Steepest Confidence Drop Since Pandemic – Cost Pressures Revealed

UK manufacturers have
reported the sharpest loss of confidence since the start of the
COVID-19 pandemic in the Make UK survey.

• Confidence Drop: British manufacturers’ confidence fell sharply to 5.8 in Q4 2024 (from 6.8 in Q3), the steepest decline since the COVID-19 pandemic.
• Manufacturing Forecast:
  • 2024: Manufacturing output expected to shrink by 0.2% (previously forecasted +0.5%).
  • 2025: Growth is forecast at 0.7%, slower than broader economic growth.
• Sector Conditions:
  • Output and orders remain positive.
  • Recruitment and investment intentions are stable.
  • Confidence among manufacturers has significantly worsened compared to the previous quarter.
• Cost Pressures:
  • Rising costs, including a £25 billion employer social security hike and a nearly 7% minimum wage increase (effective April 2025), are intensifying pressure on businesses.
• Economic Context:
  • UK’s GDP contracted in September and October 2024, the first consecutive monthly declines since 2020.
  • Broader surveys indicate weakening hiring intentions following the budget.

This article was written by Eamonn Sheridan at www.forexlive.com.