Skip to content
All about finance. — Investing — Insurance — business — 45 — England — Especially — general-news — Finance — Export — Politics — Stocks — Recession

Economic Adjustment Ahead: Bank of England Predicted to Reduce Interest Rates to 3.25%, Amid the Worst Export Decline since the Covid Pandemic in the U.K.

Struggling British manufacturing industry records contraction for the seventh consecutive month, as per data from a key business study.

,   and  Administrator
3 min read

Economic Adjustment Ahead: Bank of England Predicted to Reduce Interest Rates to 3.25%, Amid the Worst Export Decline since the Covid Pandemic in the U.K.

Rewritten Article:

The latest report shows a gloomy outlook for British manufacturers as the ongoing trade war between the US and UK takes its toll. The strain on the manufacturing sector has resulted in seven consecutive months of shrinkage, with demand for British goods hitting its worst slump since the pandemic's peak.

According to data from a closely watched business survey, the overall performance indicator for manufacturing fell to 45.4 in April, remaining below the 50-mark that separates growth from contraction - a seventh month of recession. This decline was particularly pronounced in new export business, which plummeted to levels last seen during the height of the pandemic in May 2020.

US tariff announcements are reportedly having a significant impact on global markets, as trading partners adapt to increased trade volatility, according to Rob Dobson, director at S&P Global Market Intelligence. Exports from the US, Europe, and China all showed declines.

Meanwhile, businesses are grappling with higher costs due to Labour's decision to hike employer national insurance and sharply increase the minimum wage. This is leading to higher selling prices and job cuts, with employment declining for the sixth month in a row. Business confidence among manufacturers is at an all-time low since November 2022, following Liz Truss's disastrous mini-Budget.

The US-UK trade war underscores tough times ahead for the UK economy, already struggling with Labour's tax hikes. The Bank of England, anticipating these challenges, is expected to step up interest rate cuts, with Morgan Stanley predicting five more cuts this year, taking the Bank rate down to 3.25% by the end of 2025 from 4.5% today.

Q: What is the current state of demand for British goods?A: The demand for British goods is suffering its biggest downturn since the pandemic's peak due to the ongoing trade war between the US and UK.

Q: What is the main reason for the decline in demand for British goods?A: The decline in demand for British goods is primarily due to the ongoing trade war between the US and UK, which has caused trading partners to adapt to increased trade volatility. US tariff announcements are having a noticeable impact on global markets, according to experts.

Q: What is the impact of US tariffs on the UK manufacturing sector and economy?A: While UK exports could potentially benefit from competitive advantages against other tariff-heavy countries in the US market, the impact on the UK manufacturing sector and economy is mixed. The UK's limited fiscal flexibility and persistent inflation might constrain economic growth, while lower global goods prices could reduce input costs for UK manufacturers, improving competitiveness. However, sustained trade volatility and sectoral vulnerabilities remain concerns.

  • Previous
  • 1
  • Next
  • Hackers hit M&S: Silicon Valley has failed miserably... Rolls-Royce celebrates a 'promising start' to the year as it sets its sights...

Share this article

HOW THIS IS MONEY CAN HELP

  • Understanding US tariffs and their potential impact on the UK
  • Navigating the trade winds: How to protect your investments during turbulent times

Orders from the United States, Europe, and China fell, according to the PMI data. Despite the negative impact, some sectors in the UK may find competitive advantages in the US market, such as machinery, electrical equipment, and automotive parts.

DIY INVESTING PLATFORMS

AJ Bell

AJ Bell

Learn More**Learn More### Hargreaves Lansdown

Hargreaves Lansdown

Learn More**Learn More### interactive investor

interactive investor

Learn More**Learn More### InvestEngine

InvestEngine

Learn More**Learn More### Trading 212

Trading 212

Learn More**Learn MoreAffiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.

Compare the best DIY investing platforms

  1. The ongoing trade war between the US and UK has led to a significant plunge in new export business for British manufacturers, mirroring levels last seen during the peak of the pandemic in May 2020.
  2. Exceptionally high costs for businesses due to increased employer national insurance and minimum wage are leading to higher selling prices and job cuts, with employment declining for the sixth month in a row.
  3. Despite the negative impact on the UK manufacturing sector, some sectors like machinery, electrical equipment, and automotive parts may find competitive advantages in the US market due to US tariffs.
  4. Amidst the challenges, especially in finance, business, politics, and general news, the Bank of England is expected to step up interest rate cuts to mitigate the effects of the recession.
  5. Investing in stocks could be impacted by these trade tensions and economic factors, making it especially crucial to understand US tariffs and their potential impact on the UK.
  6. During times of trade volatility, it's essential to navigate the financial markets intelligently to protect and grow your investments.
Decline for seventh consecutive month in the UK's manufacturing sector, as confirmed by data from a significant business survey.
Struggling UK manufacturing industry experiences consecutive contractions over seven months, as per data from a prominent business survey.

Read also:

    Related

    Latest