British manufacturers have reported an ongoing expansion in their operation, while the UK has also enjoyed an influx in investment over the past several months – despite the speculation that Brexit talks have stirred uncertainty, hampering Albion economy.
Kristian Rouz — The recently-resumed Brexit talks between the UK and EU have been accompanied by a flurry of reports of a weakening British economy — dubbed ‘Project Fear’ by the hardline Brexiteers of the Tory Party and UKIP. However, hard data contradicts this view, pointing to an ongoing expansion across British industries, and a rise in investment.
According to a new report from the Confederation of British Industry (CBI), the UK’s manufacturing sector has kept its momentum this outgoing month, despite a rollback in factory orders. British exports have remained at above-average levels, supported by a weaker pound sterling.
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This favorable foreign trade environment bolstered hiring and factory output this month, the CBI found. The CBI’s survey of 379 British manufacturers observed a ‘broad-based’ growth across 13 out of 17 sub-sectors of the UK’s manufacturing.
“Manufacturing growth remains strong, supported by the lower level of sterling and strong global economy,” Anna Leach, CBI Head of Economic Intelligence, said. “Firms will be keen to see urgent progress on the Withdrawal Agreement to lock in transition, which is crucial to continuing frictionless trade as the UK leaves the EU.”
The CBI said British manufacturers are expecting an even greater rise in output and exports once the Brexit process is complete — as there is indeed some lingering uncertainty with regard to the future trade framework with the EU, for example.
British CEOs are looking at two possible scenarios — either the UK remains in the EU customs union, which would effectively prevent its new trade deals outside of the bloc, or Britain severs its ties with the continent in favour of promising new opportunities overseas.
Currently, both the British and European negotiators are seeking a mutually-beneficial solution — despite Brussels having been adamant to keep the UK within the EU trade framework.
“So both sets of negotiators need to demonstrate flexibility and compromise to protect trade flows worth 600 billion euros each year, particularly against the backdrop of increasing protectionist rhetoric,” CBI’s Leach said.
However, hardline Tories have said the EU’s efforts also include ‘Project Fear’ — aimed at convincing investors and business owners a no-deal Brexit would be immensely damaging to the UK‘s economy.
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“The naysayers in the Treasury have consistently wanted to paint a bleak picture because they are frightened of taking responsibility for managing the economy without the crutch of the EU. It is a sign of their weakness,” Conservative MP Jacob Rees-Mogg said. “As a dog returneth to his vomit, so a fool returneth to his folly,” he added.
Meanwhile, 31 percent of British manufacturers said their orders remain above average, while only 23 percent said orders were below normal, CBI found. 24 percent of companies reported elevated levels of exports, while only 15 percent said foreign trade is weighing on their output.
Additionally, 39 percent of UK manufacturers said their output rose over the past three months, while only 18 percent reported a slump in production.
Overall, the CBI said, manufacturers are expecting the growth in their operation to continue, with 32 percent saying their business would grow, and just 13 percent expecting a downturn.
In a separate report, global accounting firm KPMG found UK fintech investment has recently increased, outpacing the US and China. in the first half of this year, the UK’s fintech investment rose to £16 bln — compared to £14 bln in the US, and £15 bln in China.
KPMG also said that Europe as a whole has attracted £26 bln in fintech investment over the same period, meaning the UK accounted for more than half of the total volume.
“Despite some concerns about Brexit, venture capital investors remained bullish on UK fintech, with four of Europe’s top 10 deals happening here,” KPMG analysts said.
In this light, UK Trade Secretary Liam Fox said the chances in favor of a ‘no-deal’ Brexit are 60 to 40 amongst cabinet members — but the government has decided to continue talks with the EU to see whether Brussels is able to come up with a viable deal proposal.
Some ministers have suggested that while a ‘hard Brexit’ is fine, a deal with the EU coupled with freedom in overseas trading and investment relations would be an even better outcome of the talks.
“We have to do the emergency ‘no-deal’ planning but it is not in our interests that we end up in that position,” Cabinet Office minister David Lidington said.