Britain’s industrial strategy was announced to much government fanfare and even more sceptical commentary some 18 months ago. Today the sceptics are in the ascendant.
This morning sees the release of NatWest’s new UK Automotive PMI report, produced in partnership with IHS Markit, which is behind the closely watched set of economic series covering services, construction and manufacturing in its entirety.
Awful doesn’t even begin to describe the numbers. The figure of 43.5 in May, with 50 representing no change, represents a sharp deterioration when compared to the 48.9 the compilers recorded in April, and indicates that the sector is in the midst of one of the sharpest slowdowns it has experienced in years.
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It’s doing badly even when compared to the wider manufacturing sector, which isn’t exactly in the sunlit uplands itself. The sector-wide IHS Markit/CIPS figure for the same month spluttered in at 49.4, the worst since 2016.
This morning will also see BDO, the accounting and consultancy firm, releasing the results of a survey of manufacturers in which three quarters (74 per cent) of the respondents said they don’t think enough progress has been made with regard to the said “strategy”. Perhaps that’s because it isn’t really a strategy at all. It’s a PR stunt that involves a lot of waffle and precious little in the way of action.
BDO further says that many manufacturers feel that government claims of “record levels” of public investment into research and development, infrastructure and technical education have yet to have a significant, positive impact on their businesses.
Then there’s Brexit. Of course there’s Brexit. You can’t really escape it, especially when considering economic issues. It’s like your least favourite uncle who hogs the best armchair and talks loudly about his golf club when everyone else is trying to watch Netflix.
BDO says it’s hitting manufacturers twice over. It’s preventing progress from being made on the “strategy” while at the same time hitting order books and spreading uncertainty faster than chickenpox in a primary school.
It is largely responsible for the dismal IHS Markit figures I referred to, which have been hammered as a result of firms unwinding the stockpiles they built up before the last cliff edge.
They might soon have to build them back up because there’s serious talk of a no-deal Brexit again. It could, in a few short months, see goods travelling to Europe from the UK or supplies coming in from the other direction hit with heavy tariffs under the WTO rules Brexiteers keep telling us are marvellous despite all evidence to the contrary and made subject to long delays at customs when they used to flow freely and without friction.
1/10 No deal, no tariffs
The government has announced that it would slash almost all tariffs in the event of a no-deal Brexit. Notable exceptions include cars and meat, which will see tariffs in place to protect British farmers
Getty
2/10 Fingerprint payment
NatWest is trialling a new bank card that will allow people to touch their hand to the card when paying rather than typing in a PIN number. The card will work by recognising the user’s fingerprint
NatWest/PA Wire
3/10 Mahabis bust
High-end slipper retailer Mahabis has gone into administration. 2 Jan 2019
Mahabis
4/10 Costa Cola
Coca-Cola has paid £3.9bn for Costa Coffee. A cafe chain is a new venture for the global soft drinks giant
PA
5/10 RIP Payday Loans
A funeral procession for payday loans was held in London on September 2. The future of pay day lenders is in doubt after Wonga, Britain’s biggest, went into administration on August 30
PA
6/10 Musk irks investors and directors
Elon Musk has concluded that Tesla will remain public. Investors and company directors were angry at Musk for tweeting unexpectedly that he was considering taking Tesla private and share prices had taken a tumble in the following weeks
Getty
7/10 Jaguar warning
Iconic British car maker Jaguar Land Rover warned on July 5, 2018 that a “bad” Brexit deal could jeopardise planned investment of more than $100 billion, upping corporate pressure as the government heads into crucial talks
AFP/Getty
8/10 Spotif-IPO
Spotify traded publically for the first time on the New York Stock Exchange on Tuesday. However, the company isn’t issuing shares, but rather, shares held by Spotify’s private investors will be sold
AFP/Getty
9/10 French blue passports
The deadline to award a contract to make blue British passports after Brexit has been extended by two weeks following a request by bidder De La Rue. The move comes after anger at the announcement British passports would be produced by Franco-Dutch firm Gemalto when De La Rue’s contract ends in July.
The British firm said Gemalto was chosen only because it undercut the competition, but the UK company also admitted that it was not the cheapest choice in the tendering process.
10/10 Beast from the east economic impact
The Beast from the East wiped £4m off of Flybe’s revenues due to flight cancellations, airport closures and delays, according to the budget airline’s estimates. Flybe said it cancelled 994 flights in the three months to 31 March, compared to 372 in the same period last year.
1/10 No deal, no tariffs
The government has announced that it would slash almost all tariffs in the event of a no-deal Brexit. Notable exceptions include cars and meat, which will see tariffs in place to protect British farmers
Getty
2/10 Fingerprint payment
NatWest is trialling a new bank card that will allow people to touch their hand to the card when paying rather than typing in a PIN number. The card will work by recognising the user’s fingerprint
NatWest/PA Wire
3/10 Mahabis bust
High-end slipper retailer Mahabis has gone into administration. 2 Jan 2019
Mahabis
4/10 Costa Cola
Coca-Cola has paid £3.9bn for Costa Coffee. A cafe chain is a new venture for the global soft drinks giant
PA
5/10 RIP Payday Loans
A funeral procession for payday loans was held in London on September 2. The future of pay day lenders is in doubt after Wonga, Britain’s biggest, went into administration on August 30
PA
6/10 Musk irks investors and directors
Elon Musk has concluded that Tesla will remain public. Investors and company directors were angry at Musk for tweeting unexpectedly that he was considering taking Tesla private and share prices had taken a tumble in the following weeks
Getty
7/10 Jaguar warning
Iconic British car maker Jaguar Land Rover warned on July 5, 2018 that a “bad” Brexit deal could jeopardise planned investment of more than $100 billion, upping corporate pressure as the government heads into crucial talks
AFP/Getty
8/10 Spotif-IPO
Spotify traded publically for the first time on the New York Stock Exchange on Tuesday. However, the company isn’t issuing shares, but rather, shares held by Spotify’s private investors will be sold
AFP/Getty
9/10 French blue passports
The deadline to award a contract to make blue British passports after Brexit has been extended by two weeks following a request by bidder De La Rue. The move comes after anger at the announcement British passports would be produced by Franco-Dutch firm Gemalto when De La Rue’s contract ends in July.
The British firm said Gemalto was chosen only because it undercut the competition, but the UK company also admitted that it was not the cheapest choice in the tendering process.
10/10 Beast from the east economic impact
The Beast from the East wiped £4m off of Flybe’s revenues due to flight cancellations, airport closures and delays, according to the budget airline’s estimates. Flybe said it cancelled 994 flights in the three months to 31 March, compared to 372 in the same period last year.
Boris Johnson, who is likely to be embarrassing the country as its next prime minister in a depressingly short time, has talked about bringing back “fun”. Given what he’s been saying with respect to Brexit, his “fun” is everyone else’s nightmarish chaos.
Oxford Economics recently highlighted that a slowdown in global industrial activity has continued into 2019. The firm still expects production to rise this year, but there are an awful lot of risks and headwinds that could see that number revised downwards, notably the trade tensions between the US and just about everyone and the risk of, you’ve guessed it, a chaotic Brexit. It will, of course, hurt Europe. But it will hurt the UK an awful lot more. If it sprains the ankle of the former it will break both the latter’s legs and probably one of its arms.
Hang on, I think I’m beginning to get it. The government’s “industrial strategy” isn’t a PR stunt after all. It’s clearly been cleverly designed to ensure that we’re left with no more manufacturing in a few short years so people stop giving minsters a hard time about what a dismal job they’re doing when it comes to lifting up this important sector.
