- Rain Newton-Smith , CBI director of economics
The recent weakening in the Sterling helped the British manufacturing sector to stabilise somewhat in February. According to the Confederation of British Industries, the overall balance of total orders declined to –17%, meaning more companies reported their activity below normal than above. Businesses, however, had expected output to grow in the coming quarter, with 30% predicting expansion, and 19% a decline, resulting in a balance of +11%. The UK manufacturing sector has been struggling due to a strong Sterling, slow growth in the Euro zone, the key trading partner, and external headwinds. Moreover, increased international competition, slow take up of technology, unsupportive ecosystems and out-dated business models also pose a threat to the UK's manufacturing industry.
According to the official data, factories' output dropped 0.2% between November and December, marking the third consecutive decline since September 2015. The total industrial production was revised down in the fourth quarter to a 0.5% fall. The first official estimate of the fourth-quarter GDP growth showed the British economy expanded 0.5%, while the annual rate of quarterly growth decelerated to 1.9%. Revision of both industrial and construction sectors had negative impact of as much as 0.06 percentage points of Q4 GDP.
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