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Engineering sector hit by effects of Brexit, report claims

Published 02/09/2016

Scottish Engineering surveyed members for its quarterly review and found falling orders and outputs as well as a drop in employment levels
Scottish Engineering surveyed members for its quarterly review and found falling orders and outputs as well as a drop in employment levels

Post-Brexit uncertainty has been blamed for a slump in the Scottish engineering industry.

Scottish Engineering surveyed members for its quarterly review and found falling orders and outputs as well as a drop in employment levels.

The report found o rder levels have been negative for eight consecutive quarters and were worse only during the global slump of 2009.

A total of 45% of firms said their orders were down while 32% said they remained static and 23% said orders had gone up.

Almost half of firms (48%) said their output volumes had fallen in the past three months while 21% reported an increase and 31% said they remained the same.

A total of 29% of respondents said their staffing levels had dipped while 51% said there had been no change and 20% reported an increase.

The report said Brexit uncertainty was having a "totally negative effect" on the Scottish engineering industry.

Bryan Buchan, Scottish Engineering chief executive officer, said: "We appear to have been hit on all fronts.

"The potential benefits of a weaker pound for exports have yet to be realised and our figures show there has been substantial downturn in export orders.

"At the same time, we have seen a significant rise in commodity prices, notably metals including nickel and zinc which is impacting directly on companies involved in fabrication and galvanising in particular."

He said the hopes the Bank of England's recent stimulus package will "promote some improvement" but called on Chancellor Philip Hammond "to step in with further measures to defend our economy".

Lord Andrew Dunlop, Parliamentary Under-Secretary of State for Scotland, said in the review there may be "turbulence ahead" as the UK economy adjusts to the vote to leave the European Union (EU).

He added: "I fully recognise the concerns and questions which have arisen from the uncertainty of this decision for engineering businesses and their employees.

"However, we will build on our strengths as an open and dynamic trading nation, forging a new global role for the UK.

"I am pleased that the Treasury acted to secure the status of EU-funded projects, providing certainty in the medium-term on projects which are currently under way.

"It is important that we make it clear that the UK remains open for business."

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