Britain’s factories cut output at the fastest rate since the Covid lockdown as Rachel Reeves’s Budget was blamed for triggering a wave of project cancellations. The Telegraph has more.
Output in the three months to December fell at the fastest pace since August 2020, according to a survey of manufacturers published by the Confederation of British Industry (CBI).
Ben Jones, an economist at the CBI, said Ms. Reeves’s maiden Budget has crushed demand for manufactured goods.
He added:
Manufacturers are facing a perfect storm of weakening external demand on the one hand, amid political instability in some key European markets and uncertainty over U.S. trade policy. And on the other hand, domestic business confidence has collapsed in the wake of the Budget, which has increased costs and led to widespread reports of project cancellations and falling orders. Manufacturers are heading into 2025 with no expectation of any near-term improvement.
The share of factories reporting falling production outweighed the proportion reporting an increase by a margin of 25 percentage points, the CBI’s survey showed. It marks the sixth consecutive month in negative territory, and points to an accelerating downturn in the industry.
Manufacturers expect the situation to get worse, with almost a third of respondents anticipating a further fall in output in the next three months. It is the worst forecast for expectations since May 2020, when Britain was in the first Covid lockdown.
Factories reported a marked deterioration in their order books in December compared with a month earlier, with order levels at their lowest in over four years.
Almost every type of factory suffered, the CBI found, with those making furniture, glass and ceramics, and cars among the hardest hit.
Household and business confidence has collapsed in the wake of the Budget after Ms. Reeves launched a £25 billion raid on National Insurance contributions (NICs) paid by employers. Businesses have warned that the changes, combined with a 6.7% increase in the minimum wage from April, will force them to freeze hiring and raise prices for consumers.
Worth reading in full.
Show Zone has become the first major retailer to confirm that it will be closing stores as a result of Rachel Reeves’s tax-hiking Budget. The company, which according to GB News currently operates 297 stores with around 2,250 employees, has announced many of its locations will be forced to shut down.
Meanwhile, the Mail‘s Alex Brummer reports on “Labour’s Truss scale shock” with the “bond gap with Germany at its highest level in 34-years”.
The short-lived former PM has picked up on the news herself:
Ten year bond yields now higher than they were in the 2022 LDI crisis.
Only this time the U.K. is paying a huge premium compared to other markets like Germany.
Where is the outrage from @BBC, @bankofengland and MPs?
Or were they motivated by something else in 2022?
Rachel from Accounts is really getting the hang of this economy thing now…
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