Published on : Sep 09, 2015
The economic slump in China has badly hit the UK manufacturers with dip in their output and exports. According to the manufacturers’ organization EEF, rise in car production and sales in the domestic consumer market has not compensated for the drop in overseas demand. Mechanical equipment manufacturers have been particularly affected with orders from China dwindling, and flagging demand from the oil and gas sector owing to drop in oil prices. EEF has revised its forecast regarding the growth of the manufacturing sector in the UK. Renewed Eurozone tensions and slowdown in China has led the trade group to halve its growth forecast for this year from 1.5% to 0.7%.
In the latest survey of businesses conducted by EEF, the gloomier outlook of the manufacturing sector in the UK has been reflected by fall in production and orders. The EEF survey has revealed that for the first time in more than two years, there were more companies registering a decline in output than a rise. The poll surveyed 442 manufacturers that showed that the export orders dropped to a six-year low in the last three months. Domestic orders have also plunged low due to the dependence of manufacturers on the oil and gas sector.
Though the companies have reported that demand in Europe is improving, growth opportunities in Asia has fallen drastically. However, according to the report, the companies are planning to invest and employ more in Asia region, albeit by a slim margin. Economists have pointed out that the slowdown in Chinese economy has mixed effects on the UK. Household budgets are expected to be boosted by lowering of oil prices. The turmoil in the market might prompt Bank of England to keep interest rates low.