U.K. Manufacturer Confidence Drops to Recession Levels on Brexitby
Quarterly index of sentiment slides to lowest since 2009
Monthly export-orders gauge falls to weakest since January
U.K. manufacturing confidence dropped to the least since the last recession after Britain voted to leave the European Union, according to the Confederation of British Industry.
A quarterly index of sentiment slumped to minus 47 in July from minus 5 in April, the London-based lobby group said. That’s the lowest since early 2009, when the U.K. was in the midst of five straight quarters of contraction. A monthly gauge of export orders fell to the weakest since January.
The report -- conducted between June 27 and July 13 -- is the latest in a string of surveys showing that the June 23 referendum result hit confidence. An index of services and manufacturing published by Markit Economics Friday showed a “dramatic deterioration” in July, with business activity shrinking at its fastest pace in seven years.
“It’s clear that a cloud of uncertainty is hovering over industry, post-Brexit,” said Rain Newton-Smith, chief economist at the CBI. “It’s important now for the new government to steady the ship with a plan, and a clear timetable, for negotiating the U.K.’s relationship with the EU.”
The darkening outlook adds pressure on the Bank of England to deliver additional stimulus when policy makers meet next week. While Chancellor of the Exchequer Philip Hammond has said while he’s ready to “reset” Britain’s fiscal policy if needed, the BOE will handle any short-term fallout, “using the monetary tools at their disposal.”
Policy makers, led by Governor Mark Carney, are due to publish their quarterly Inflation Report alongside their latest decision on Aug. 4 in London. Minutes of the July decision said “most” of the nine-member committee expect loosening at the next gathering.