Free Up Cash Flow to Offset Manufacturing Slowdown

23rd May 2018.

A slowdown in UK manufacturing could be more prolonged than previously thought, analysts said on Tuesday, after a monthly industry survey pointed to the weakest output growth in two years.

Brexit uncertainty lingers over British business, and manufacturers, in particular, are struggling to gauge interest in domestic products after the negative effects Brexit had on the image of the UK. Ultimately morale is low, with many workers unsure of their prospects after Brexit and the future of their sector. Slowdowns in retail and service sectors and the reduced consumer spending are no doubt bringing manufacturers to a screeching halt.

According to a survey of 441 companies conducted by the Confederation of British Industry (CBI), only eight out of 17 manufacturing subsectors reported a notable growth in output. The survey further singled out tobacco and food and drink industries as experiencing the most dramatic slowdown.

As consumers spend less, the financial strength of businesses is weakened. As a result, output and productivity are threatened by low morale amongst employees. At the Credit Protection Association, our debt recovery services free up the cash flow that can be used on new equipment and training programmes which will enliven the workforce and boost the strength of UK factories.

Although the CBI survey reported that firms “expect the slowdown to be temporary,” Howard Archer, chief economic adviser to the EY Item Club, warned that the sector had lost momentum and was “operating at a markedly lower level” to that seen in the second half of 2017.

The survey “will hardly inspire confidence at the Bank of England that the economy is bouncing back significantly in the second quarter after GDP growth of just 0.1 percent quarter-on-quarter in the first quarter,” said Mr Archer.

Output growth has slowed steadily since November, when British manufacturers reported the most robust demand since 1988.

Domestically, the sector faces challenging conditions, including more cautious consumer spending and Brexit uncertainty. The competitive edge exporters enjoyed from a weaker pound in the aftermath of the Brexit vote has waned as sterling has regained ground.

Most industries within the UK have suffered from a slowdown; whether it’s sales, spending, profit or output. The manufacturing industry was expected to suffer the most from the 2016 referendum, as our departure from the EU distorted our image across the globe. It is therefore imperative that British industries work hard to restore our competitive edge, all sectors working hard to illustrate the continued strengthening of the UK after Brexit.

Historically, the UK has been affronted with skyrocketing business rates and interest rates, as well as high inflation. However, now that inflation and interest rates remain low and household budgets remain light, British businesses look capable of overcoming economic conditions.

At the Credit Protection Association, our debt recovery services provide our members with the extra cash necessary to pursue prosperity, despite the political and economic climate. Our collection staff chase down late payers and unpaid invoices and provide our members with the financial freedom to explore new projects and opportunities.

We have encouraged our members to invest in new equipment and technology, as well as the hiring and training of professionals to operate it. Refocussing efforts back towards the workforce is an effective tactic in improving productivity, output and the overall success of the sector.

The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!

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