How Does Britain's Uncertainty Over Europe Affect Manufacturing?

According to the financial times, factory closures, steel mills are on the verge of bankruptcy, and big industrial companies in Britain are putting up signs of sale, a sign that has brought Britain back to the economic depression decades ago. From the bankruptcy of British Steel to the planned closure of Honda (Honda) and Ford (Ford), people are worried that the British manufacturing industry will soon enter a recession similar to that of 1980s.

Tim Lawrence of PA Consulting, a consultancy, says the biggest risk is the uncertainty surrounding the UK's uncertainty over Europe, resulting in reduced investment and declining productivity. For many manufacturers who rely on frictionless trade for parts procurement and export, tariff and customs inspection initiated by no agreement will be a big problem. PSA group, a Vauxhall motor company, warned that if the UK's Ellesmere Port plant was not profitable, it would withdraw from all production lines.

The uncertainty over Europe has already caused losses, and the output of the UK manufacturing industry has fallen by 4.1%, the biggest monthly decline since April 2002. As the carmakers implemented the maintenance shutdown to match the original date of March 29th, even if the manufacturers resumed the production line, it would still be insufficient to make up for the loss. At the beginning of this year, the manufacturing industry began to decline as a result of the worry that Britain had no agreement to remove Europe.

Not only the UK's economic outlook is not optimistic, the weak global demand and the trade war of the US President Donald Trump are also hurting other large economies. The manufacturing activity in Germany and Mainland China has shrunk and the US has slowed down. However, British factories may be even more difficult. Economists predict that the overall economic growth rate in 2019 will be 1.3%, and that in 2020 will be slightly increased to 1.4%. It is estimated that in the UK, manufacturing output will grow by 0.8% in 2019 and 0.6% in 2020, and that Britain is the ninth largest manufacturing country in the world.

In addition, according to the National Bureau of Statistics (ONS), since the global recession, four major areas of growth in the UK have been transport equipment (such as trains, aircraft and ships), automobiles, food and machinery maintenance industries, but the largest areas of decline are pharmaceutical, machinery, printing, recording media, and basic metal and related metal products industries.

Thomas Pugh, an economist at Capital Economics, said that the current impact on British manufacturing may be temporary or cyclical, but some of them are permanent and will drag on the industry for a long time. It is uncertain whether British manufacturing will recover before the global economic rebound in 2021. Aston university research shows that fewer and fewer manufacturing companies are achieving high growth and new start-ups in the industry are decreasing. Tim Lawrence said that if we do not invest in technology development, the competitiveness in the next ten years will be significantly reduced.