UK manufacturers record sharpest rise in optimism since 1973 as Covid recedes | Manufacturing sector

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UK manufacturers have recorded the sharpest rise in optimism since 1973 amid growing demand as Covid lockdown measures are relaxed, the latest snapshot of activity from the CBI shows.

In a poll of 288 leading industrial companies, the employers’ organisation found business sentiment increased in the three months to April at the fastest pace since April 1973, as progress with the Covid vaccine raised hopes for a rapid return to relative normality later this year.

Manufacturers also plan to hire staff at the fastest rate since 1974 in the next three months, according to the survey, as firms take on more workers to prepare for looser Covid restrictions.

It comes after official figures showed UK unemployment fell for the second consecutive month in February. However, it follows the fastest rise in redundancies on record late last year, while almost 5 million workers remain furloughed with the economy still under pressure from the pandemic.

Rain Newton-Smith, the CBI’s chief economist, said a phased relaxation of restrictions had lifted the mood among firms, driving orders, employment and investment plans, but said it would take time for companies to recover from the worst recession in 300 years. “Continuing to support firms while they get on a steadier footing as restrictions ease will be crucial to recovery. The government should continue to work closely with business to ensure reopening is a success, while boosting competitiveness over the long term,” she said.

Timeline

How England’s Covid lockdown is being lifted

Show

Step 1, part 1

In effect from 8 March, all pupils and college students returned fully. Care home residents can receive one regular, named visitor. 

Step 1, part 2

In effect from 29 March, outdoor gatherings allowed of up to six people, or two households if this is larger, not just in parks but also gardens.
Outdoor sport for children and adults allowed.
The official stay at home order ends, but people will be encouraged to stay local.
People will still be asked to work from home where possible, with no overseas travel allowed beyond the current small number of exceptions.

Step 2

In effect from 12 April, non-essential retail, hair and nail salons, and some public buildings such as libraries and commercial art galleries can reopen. Most outdoor venues can open, including pubs and restaurants, but only for outdoor tables and beer gardens. Customers will have to be seated but there will be no need to have a meal with alcohol.

Also reopening are settings such as zoos and theme parks. However, social contact rules will still apply here, so no indoor mixing between households and limits on outdoor mixing.
Indoor leisure facilities such as gyms and pools can also open, but again people can only go alone or with their own household.
Reopening of holiday lets with no shared facilities is also allowed, but only for one household.
Funerals can have up to 30 attendees, while weddings, receptions and wakes can have 15.

Step 3

Again with the caveat “no earlier than 17 May”, depending on data, vaccination levels and current transmission rates.

Step 3 entails that most mixing rules are lifted outdoors, with a limit of 30 people meeting in parks or gardens.
Indoor mixing will be allowed, up to six people or, if it is more people, two households.
Indoor venues such as the inside of pubs and restaurants, hotels and B&Bs, play centres, cinemas and group exercise classes will reopen. The new indoor and outdoor mixing limits will remain for pubs and other hospitality venues.

For sport, indoor venues can have up to 1,000 spectators or half capacity, whichever is lower; outdoors the limit will be 4,000 people or half capacity, whichever is lower. Very large outdoor seated venues, such as big football stadiums, where crowds can be spread out, will have a limit of 10,000 people, or a quarter full, whichever is fewer.
Weddings will be allowed a limit of 30 people, with other events such as christenings and barmitzvahs also permitted.

This will be the earliest date at which international holidays could resume, subject to a separate review.

Step 4

No earlier than 21 June, all legal limits will be removed on mixing, and the last sectors to remain closed, such as nightclubs, will reopen. Large events can take place.

Peter Walker Political correspondent

Economists said manufacturers were more optimistic about the future with Brexit now largely in their rear-view mirror. Domestic orders expanded at the fastest rate since July 2018, while export orders were flat – although this was the strongest performance in two years after a period of intense uncertainty over Brexit.

However, manufacturers suffered a sharp drop in exports at the start of the new trading relationship with the EU because of border delays and extra paperwork. Exports have picked up in recent months, but friction is expected to form a permanent feature of the post-Brexit UK-EU trading relationship.

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Average costs accelerated at the fastest pace since April 2011, reflecting the disruption caused by Brexit and Covid, and rising demand for goods and materials.

In the early 1970s Britain recorded the strongest GDP growth since the second world war – before a period of economic turbulence took hold towards the middle of the decade, with strikes and industrial unrest, galloping inflation, the three-day week, and the winter of discontent. Early in 1973 the economy was booming as Edward Heath’s Conservative government went for growth, fuelling a property bubble, before problems started in the autumn with the oil price shock caused by the Yom Kippur war and industrial action by the National Union of Minerworkers.

This year Britain’s economy is forecast to grow by 4%, followed by 7.3% next year – the fastest growth rate since 1948 – as the pandemic recedes, with GDP recovering its pre-Covid peak by the middle of 2022. However, concern remains over the extent of lasting scars. The recovery would also be derailed if new variants caused a growth of infections and a return to tougher government restrictions.

Hafta Ichi
Source: The Guardian
Keyword: UK manufacturers record sharpest rise in optimism since 1973 as Covid recedes | Manufacturing sector

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