As readers, we often seek a behind-the-scenes glimpse of the top stories handpicked by influential editors. In this case, Roula Khalaf, Editor of the FT, curates her favorite tales in a weekly newsletter known as the Editor’s Digest. Let’s dive into the recent happening she deemed noteworthy.
- Confidence in the UK economy weathered a significant blow in the aftermath of Rachel Reeves’ tax-heavy Budget. Following the sharpest decline since the onset of the Covid-19 pandemic, manufacturers’ confidence score plummeted from 6.8 to 5.8 in the final quarter. This setback, as reported by the survey conducted by trade group Make UK and business advisory firm BDO, marks the largest quarter-on-quarter drop since the spring of 2020.
- Make UK, in response to the Budget, highlighted how the previous momentum in UK manufacturing sentiment came to a sudden stop. The survey paints a dim picture of economic conditions for the upcoming year, showcasing the substantial impact on manufacturers. Fhaheen Khan, senior economist at Make UK, remarked on the current predicament, “Manufacturers are now facing a cost crisis that has sharply diminished their confidence.”
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Despite pockets of optimism with improved output, total orders, recruitment intentions, and stable investment plans portrayed in the survey, the broader outlook of UK manufacturing output is grim. Make UK forecasts a contraction of 0.2 percent in 2024, a stark shift from the previously anticipated 0.5 percent expansion. However, there is a glimmer of hope for a 0.7 percent growth in 2025.
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The recent economic climate poses challenges for the Labour government, evidenced by the negative performance indicators. With the UK GDP growth rate slowing down, the £25bn increase in employer national insurance contributions has rattled business morale. The economic contraction, coupled with the tax hikes, has raised concerns over faster growth, the government’s primary mission.
In conclusion, the economic landscape in the UK faces uncertainty with conflicting data and policy decisions. As we anticipate the next moves by the Bank of England and analyze rates, it is crucial to monitor how the market adapts to these changing dynamics. Stay informed, stay engaged, and be prepared for what lies ahead.
