‘Toxic mix’

Brexit uncertainty and the continued squeeze in wages are combining to form a toxic mix which is hitting manufacturing investment, Unite has warned this week (September 3).

The latest UK manufacturing purchasing managers’ index (PMI) shows Britain’s factory growth has hit a two-year low amid Brexit uncertainty.

The figures were released at the same time as EU chief negotiator Michel Barnier said he “strongly opposes” Theresa May’s Brexit plans and warned that EU car manufacturers will have to buy less British components after the UK leaves the bloc.

Reflecting the ongoing uncertainty, the UK Manufacturing PMI fell to just 52.8 in August, down from 53.8 in July and the weakest reading in 25 months.

August’s PMI shows just how close the sector is to stagnation – with any PMI reading below 50 showing contraction.

Markit, which compiles the survey, said that new exports fell last month for the first time in over two years.

This dragged job creation down to near-stagnation, while business optimism hit a 22-month low.

Unite assistant general secretary Tony Burke said, “Brexit uncertainty along with the continued squeeze in wages is combining to form a toxic mix that is hitting manufacturing investment.

“Employers tell us that they are holding back on investment amid Brexit uncertainty, while the continued squeeze in wages is leaving families’ wallets running on empty.

“Rather than the drift and the missed opportunities of projects like the Swansea tidal lagoon project, we need an active industrial strategy that backs UK manufacturing and Brexit certainty to unlock investment and safeguard jobs.”

Meanwhile, in an intervention that will increase worries about the government’s shambolic handling of Brexit, the EU’s head negotiator Michel Barnier told a German newspaper that he “strongly opposes” Theresa May’s “common rulebook” proposal on Britain’s future customs relationship with the EU.

Barnier warned European manufacturers that barrier-free trade between the UK and the continent would come to an end under the Tories’ Brexit redlines.

He also advised EU automotive firms that using British parts could increase tariffs when exporting to other parts of the world.

‘Disturbing’ comments

He said, “In order for EU carmakers to benefit from the tariff benefits of the EU-Korea agreement, only a certain proportion of the services may be provided in a car in a third country. Businesses have to be careful not to use too many parts of Britain in their vehicles in the future.”

Burke said that although Unite has warned about the damage Tory proposals could do Barnier’s comments were “disturbing nonetheless”.

He said, “From almost the time it was mooted Theresa May’s Chequers deal was going to be dead in the water. It is a fudge that was intended as a balm to a warring Conservative party, rather than the serious roadmap to delivering a workable Brexit – one that will not destroy livelihoods – that it should have been.

“Unite has raised the alarm about the effects a Tory Brexit could have on our membership – particularly on those in the automotive, aerospace, science, engineering and steel sectors; who are especially vulnerable to Brexit-related disruptions to the supply chain, EU wide regulatory agencies and projects such as Galileo – but Michel Barnier’s comments are disturbing nonetheless.”

Burke added, “The Tories have no industrial strategy, they are in chaos over Brexit and we will be heading towards a gross betrayal of our manufacturing workers if the government deliberately damages world beating sectors of our economy because of intransigence and mismanagement.

“If Theresa May is unable to deliver an EU exit that provides frictionless trade with our largest trading partners, then she should call a general election and let the public decide if they want a Labour government that will.”