Manufacturing output to drop during 2012 on trade problems

Ben Southwood
Follow Ben
MANUFACTURING output will fall this year for the first time since 2009, as world economic problems take their toll, according to forecasts released today by manufacturers’ group EEF.

The group predicts a fall of 0.6 per cent in UK manufacturing output over the year, though it expects GDP overall to inch up 0.2 per cent. These are down from relatively bullish forecasts made by the EEF in January, when it expected manufacturing to grow almost one per cent over the year.

Though manufacturing has been more robust through the crisis, its focus on exports means that the Eurozone crisis, trouble with the US recovery, and a possible Chinese slowdown are all major threats to its health.

EEF’s mainline expectations are based on a “muddle-through” scenario where no cataclysmic European catastrophe transpires – the group believes a Eurozone breakup would lead to a deeper, longer recession with manufacturing output hit especially hard, falling 1.3 per cent in 2012 and 4.6 per cent in 2013.