Britain’s biggest manufacturing organisation has described the prospect of the UK leaving the EU without a deal as “economic lunacy” amid a slump in business investment intentions.
Multiple candidates to replace Theresa May as Conservative party leader and prime minister have said they would push for Brexit on 31 October, whether or not a deal has been agreed – against the warnings of every major business lobby group.
The candidates in favour of leaving with or without a deal include the bookmakers’ favourite, Boris Johnson, and Andrea Leadsom, Dominic Raab and Sajid Javid.
Stephen Phipson, the chief executive of Make UK, which represents 20,000 British manufacturers, said it would be “the height of economic lunacy to take the UK out of the EU with no deal in place”.
A survey of 344 Make UK members found that a balance of only 6% of manufacturers had increased investment in the second quarter of the year, the lowest level since the final quarter of 2016, in the aftermath of the EU referendum in June.
The balance of manufacturers intending to increase hiring in the next three months fell to only 6% from 16% in the previous quarter.
At the start of the year the sector was boosted temporarily as companies stockpiled goods and parts to prepare for potential disruption to cross-border trade on 31 March, the original date for Brexit. In a no-deal Brexit the UK’s trading relationships would default to that of the World Trade Organization.
Phipson said the manufacturing sector, which accounts for about 10% of the UK economy, was on a “clear weakening trend, which, if it continues, would push some elements of industry over the edge before too long”.
He said: “Earlier this year there was clear evidence that industry was on steroids as companies stockpiled. Underneath, however, there is now growing evidence of European companies abandoning UK supply chains, while Asian customers balk at the unknown of what may exist as the UK leaves trade agreements which operate under EU rules.”
