Business optimism falls at fastest pace since Brexit vote – CBI

The business lobby group’s latest Industrial Trends survey noted a slowdown in manufacturing order books ahead as the clock ticks down to March next year when the UK is due to leave the EU.

While the government continues efforts to try and secure a Brexit deal, the CBI said manufacturing new orders fell at the fastest rate for three years in the quarter to October, reflecting falls in both domestic and export orders.

It said that while its survey of 354 manufacturers showed that output growth was stable at an above-average pace in the three months to October, it was expected to drop off in the three months to January.

The fall reflects jitters over the Brexit deadline despite continued weakness for sterling – which boosts UK exporters’ competitiveness – and growing worries for the wider world economy.

World growth forecasts have been adjusted lower amid worries about the impact of the US trade war with China – a major factor behind the recent stock market correction that is still being felt this week.

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Economists believe that while the economy has proved more resilient since the Brexit vote than had been initially expected, recent strength can be attributed to better weather boosting the dominant service sector.

The CBI and other business leaders have urged Philip Hammond to offer more help to businesses in his pre-Brexit budget next week.

Rain Newton-Smith, the CBI’s chief economist, said of the survey: “This is a sobering set of figures demanding immediate action at home and abroad.

“Planned investment is being scaled back in the face of deepening Brexit uncertainty, so it’s vital that the chancellor incentivises manufacturers to spend in areas that will help them become more productive.

“Using the upcoming budget to increase the Annual Investment Allowance, alongside a wider review, could help the UK become more competitive with its global peers.

“Combined with meaningful business rates reform, these steps can help the UK economy to make the advances in digital and new technologies envisaged in the Industrial Strategy.”

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