Manufacturing industry shrinks at fastest rate in 11 months in ‘winter chill’
British factory output contracted at the fastest rate in 11 months in December, amid concerns about rising taxes on business from last year’s October Budget and a worsening global economy.
The S&P Global UK manufacturing PMI survey, watched closely by economists, recorded a reading of 47.0 in December, from 48.0 in November.
Any reading above 50 indicates that activity is growing while any score below means it is contracting.
Future
Manufacturers said they were concerned about future cost increases, partly driven by rising taxes announced by Chancellor Rachel Reeves last year.
Companies will pay more in national insurance contributions (NICs) from April, while the minimum wage is also set to rise, which will make it more expensive to employ people.
Firms also cited a weakening global economic outlook, as exports fell due to lower demand in Europe, Asia and the UK.
Rob Dobson, director at S&P Global Market Intelligence, said: “A stalling domestic economy, weak export sales and concerns about future cost increases led to the steepest contraction of UK manufacturing production for almost a year in December.
Hard hit
“Manufacturers are facing an increasingly downbeat backdrop. Business sentiment is now at its lowest for two years as the new Government’s rhetoric and announced policy changes dampen confidence and raise costs at UK factories and their clients alike. SMEs are being especially hard hit during the latest downturn.
“This is sending a winter chill through the labour market. December saw the sharpest cuts to staffing levels since February.
“Some companies are acting now to restructure operations in advance of the rises in employer national insurance and minimum wage levels in 2025.”
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This cannot be the responsibility of this current labour government as they have only been In power a very short amount of time, it would be totally incompetent of any political party to devastate an economy in such a short period. There must be other outside influences that are capable of causing such devastation to the current economic downturn or labour will have to reset the current reset, it will be interesting if labour even acknowledge such data.
Yes, there are plenty of reasons for this, which are way beyond the control of this labour government, and possibly any UK government in the future. Brexit, high energy prices, lack of capital investment, lack of private R&D, staffing and skill shortages, universities becoming private companies, greater competition from abroad, lack of indigenous resources, aging population, poor healthcare,etc etc. But I think the biggest problem is, nobody knows how to ‘reset’ or what to reset to. I also don’t think for a second in the UK population understands the sacrifices needed to instigate the structural changes that will improve our… Read more »
High energy prices are due to the farce of Net Zero which has been magnified by Labour since it has come to power.
Look at the NI tax increases on jobs – now no employer will take on a new employee. No new employees mean increased benefits bills.
Old Labour economics – raise taxes, increase benefits. Destroy the economy.