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No-deal Brexit 'final nail in the coffin' for UK manufacturers

STOKE-ON-TRENT, ENGLAND - SEPTEMBER 14: Chancellor Rishi Sunak chats to Colin Colcloughl during a visit to the Emma Bridgewater pottery after employees returned back to work after being furloughed on September 14, 2020 in Stoke-on-Trent, England. (Photo by Andrew Fox - WPA Pool / Getty Images)
Chancellor Rishi Sunak chats to Colin Colcloughl during a visit to the Emma Bridgewater pottery on September 14, 2020 in Stoke-on-Trent, England. Photo: Andrew Fox - WPA Pool / Getty Images

Britain’s manufacturers remain under acute pressure, according to the industry’s leading trade body, which has urged the government to urgently seek a trade deal with the EU to avert widespread job losses in the sector.

Make UK said a survey of its members conducted with accountants BDO found manufacturers were still struggling despite a recent mild uptick in business. Output and order levels remain well below historical averages and Make UK said hopes of a quick bounce back for the industry were misplaced.

“Manufacturing has begun to climb away from the abyss that it stared into earlier in the year,” said Stephen Phipson, chief executive of Make UK. “But, make no mistake it is going to be a long haul back towards normal trading conditions, with talk of a V shaped recovery nothing more than fanciful.”

READ MORE: Predictions for UK economy stop getting worse — but remain dire

Phipson said a possible no-deal Brexit at the end of the year would be “a final nail in the coffin for many companies” and warned it would lead to an “avalanche of job losses.”

He said a “comprehensive trade agreement with the EU” was “essential.”

What is a no-deal Brexit and what are the potential consequences of it?

Make UK’s third quarter survey found members were already slashing investment and laying off staff to try and preserve cash.

The group said it now expects UK manufacturing output to contract by almost 11% this year. Make UK also downgraded its expectations for a bounce back next year, saying it now expects output to rise by just 5.1% in 2021 compared to an earlier forecast of 6.2%.

READ MORE: MPs urge chancellor to extend furlough for struggling industries

“With a no-deal exit from the EU — and associated logistics, customs and cost implications — looking increasingly likely, British manufacturers will need to step up a gear in order to compete internationally, and this will require significant investment in productivity and digitalisation improvements,” said Tom Lawton, head of manufacturing at BDO.

“No-one is in any doubt about the financial challenges facing manufacturers, but turning the investment taps off now will have serious medium to long term implications. The Government must be alive to this risk and provide the support required to help UK manufacturers through this transition period and beyond.”