UK factories are on course to sink into recession next year driven by the wider economic slowdown and swelling costs cooling activity, a new survey out today shows.
Manufacturing output will shrink 3.2 per cent in 2023, according to Make UK and BDO.
The pair have been consistently slashing their forecasts for industrial output throughout this year, highlighting how sharply the economy has swung into a slump over the course of 2022.
At the beginning of the year, most economists did not think the UK would tip into a recession.
However, roaring inflation driven by a post-pandemic mismatch between supply and demand and Russia’s invasion of Ukraine turbo charging energy prices.
Stephen Phipson, chief executive at Make UK, said: “There is simply no sugar-coating the outlook for next year and possibly beyond. Even for a sector as resilient as manufacturing these are remarkably challenging times which are testing even the best and most successful of companies to the limit.”
Experts think the UK economy is on course for an at least year long recession sparked by households cutting spending in response to rising prices eroding their pay.
The Bank of England’s forecasts are among the most downbeat, predicting the longest recession in around 100 years if rates top five per cent.
The Bank is likely to hike borrowing costs 50 basis points to 3.5 per cent this Thursday, but rate setters have signalled they are unlikely to raise them into too restrictive territory.
Order growth in manufacturing industry slowed last quarter, Make UK and BDO found.