Will Germany’s downturn impact UK manufacturing?

Commenting on the latest results from the Markit/CIPS PMI manufacturing survey, Simon Hart, RSM’s Brexit lead partner said: ‘Although there has been a slight increase in the latest UK manufacturing PMI index to 49.6 from 48.3 last month, UK manufacturing sentiment remains in contraction. This aligns with our Brexit Stress Index which although has been destressing since mid-October, is still showing more stress in the economy reflecting the Brexit deadlock and now additional uncertainty caused by the 12 December General Election. 

‘Uncertainty is clearly impacting output, new orders and employment levels, despite a flurry of stockpiling activity ahead of the Halloween deadline. What will be interesting to see is how the UK compares to other major European industries hubs, in particular Germany. Many economists are watching this market closely, as the expected economic data due in mid-November could confirm that Germany has tipped into recession. This will no doubt have an impact on UK manufacturers, either directly or indirectly through supply chain and customer networks. 

‘Despite the Brexit extension to 31 January 2020, which could be seen as a reprieve for many, the general election brings a whole new level of disruption, so manufacturers need to stress test their business for future shocks in order to best mitigate any potential changes, risks and challenges ahead. Q1 2020 is going to be interesting.’