Foreign demand for UK manufactured goods has contracted for the 14th month in a row, according to the latest Purchasing Managers Index published this morning.
Falling new export orders in March are “a significant drain on demand” according to Rob Dobson of S&P Global Intelligence, who put together the survey, “offsetting signs of a modest revival in the domestic market”.
Manufacturing has now contracted for 8 of the last 9 months. Among the 650 manufacturers polled for the survey, weaker demand from the US, Europe and China was reported as the big problem hitting overseas sales.
Perhaps that means it’s a particularly good time for the government to be able to announce that the UK is joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership – which fortunately gets shortened to CPTPP.
This is a free trade area of 11 countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore and Vietnam. The government says almost all our goods exports to these countries – including cheese, chocolate and gin (among our “key” exports says the Business Department) – will now be eligible for zero tariffs, and so will be cheaper for consumers in those markets.
Kemi Badenoch, the Business and Trade Secretary, said our membership is about “using our post-Brexit freedoms to reach out to new markets around the world and grow our economy”.
The government thinks it will grow our economy – but not by a huge amount.
Channel 4 News reported on Friday that the deal was expected by the government to increase the size of our national income by 0.8% in the long term. That should have been 0.08%. It would mean our GDP will be just £1.8bn larger. And that’s not this year or next – but over the long term – which means the next 15 years.
UK exports to current CPTPP countries are set to grow 65% by the end of this decade – worth an extra £37bn. The problem is that growth is already set to happen even without us joining the Agreement. The extra benefit from joining the free trade deal is smaller – though given the evidence of today’s Purchasing Managers’ Index, any boost anywhere will be welcome.