Between the EU referendum and the eventual triggering of article 50, UK industry as a whole was facing an uncertain future. However, thanks to the weakening of the pound (as of April it had fallen 16% against the US Dollar and 10% against the Euro) British manufacturing has managed to complete a remarkable return to confidence. The outcome of the falling pound has meant an increased demand for our manufactured exports as buyers both in the eurozone and further out are able to take advantage of cheaper products.
A survey carried out by the same research group to produce the purchasing manager’s index (PMI), an index to show the growth or shrinkage of an industry, showed a rise in the UK’s manufacturing industry to 57.3, the highest since 2014. A score of above 50 on this index shows growth within the industry. These results show a British attitude towards adversity, as through the referendum result, the triggering of article 50 and then the call for a snap election, the UK manufacturing industry has forged on to grow and create jobs as the surrounding critics claim that such was not possible.
Another side effect of the weakening currency was the increase in cost of imported goods, also increasing the demand for nation side manufacturing. Samuel Tombs, chief UK economist at Pantheon Macroeconomics noticed that the “The… manufacturing sector… narrowed to become almost exclusively dependent on domestic demand in January”. This effect and the consequences were mirrored across the eurozone as it also saw a growth spurt and reached a six-year high. The worry however, is that the price of UK made products will rise alongside the rising import prices and as such cause inflation to increase from a projected 1.6% to a figure possibly upwards of 3.5%.
While the increase in jobs and industry output may be good news for now, the question to be asked is will this growth spurt continue. As the election looms and with it the Brexit strategy that will be adopted, uncertainty once again hangs in the air. UK manufacturing has stood boldly through it already, but can another wave bring it down or will it encourage the industry to fight through and once again represent the UK on a global scale.