Yahoo Finance UK manufacturers boosted by Brexit stockpiling
Manufacturers enjoyed a Brexit boost last month, as businesses ordered extra ahead of the end of the transition period.
The latest Lloyds Bank UK Recovery Tracker found eight of the UK’s 14 sectors outperformed international counterparts in December, led by the manufacturing industry.
Manufacturing was the biggest contributor to output growth in the final month of 2020. The sector was boosted by a spike in demand for British goods ahead of the end of the Brexit transition period on 31 December. Performance was also aided by the easing of November’s lockdown restrictions at the start of December.
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Output of chemicals (63.2), household products (57.1), and food and beverages (54.6) rose ahead of international counterparts. (A reading above 50 signals output is rising, while a reading below 50 indicates output is contracting.)
The UK’s transportation (56.9) sector also outstripped global performance, as Brexit stockpiling upped demand for logistics and hauliers. December marked the transport sector’s first rise in activity since July and the fastest growth in nearly two-and-a-half years.
Lloyds’ tracker, compiled with IHS Markit, provides an insight into the shape and pace of the UK’s economic recovery from COVID-19. The latest data was gathered between 4 December and 21 December, ahead of the introduction of tighter lockdown restrictions at the end of the month.
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Businesses surveyed by Lloyds were more optimistic about 2021 than overseas counterparts.
“While this survey was conducted before the latest national lockdown was announced, it is still worth highlighting the vaccine-induced rebound in business confidence across the economy,” said Jeavon Lolay, head of economics and market insight at Lloyds Bank Commercial Banking.
“It is clear that, for many firms, this represents the defining influence for their prospects in the year ahead.”
Analysts at ING warned that December’s bounce in activity and optimism was unlikely to have carried through to the new year.
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“Trade disruption will deliver a sizeable hit to UK manufacturing output this quarter, while lingering uncertainty and potential instability surrounding the UK-EU trade deal will keep a lid on investment,” the Dutch bank wrote in a note on Tuesday.
“We expect consumers to lead a sharp GDP rebound this year, but higher costs and disruption will likely prevent a full recovery before late-2022.”
Watch: EU eyes scheme to share surplus COVID-19 vaccines with poorer nations.
