Britain’s export business remains “strong” and is continuing to benefit from the weaker pound, a survey has found.
Although factory orders cooled slightly overall in the three months to August, exports remained at a pace well above the long-term average, the report by the Confederation of British Industry said.
Britain’s June 2016 vote to leave the EU saw its value collapse overnight from $1.50 and slip below $1.20 at the start of last year.
Its weakness has driven up the cost of imports, pushing inflation higher and squeezing household finances as well as profit margins for struggling retailers.
But manufacturers have been helped by the pound’s weakness, which makes British-made goods more competitive globally.
The CBI’s monthly survey of the manufacturing industry revealed it expanded in 13 out of 17 sectors , boosted by food, drink and tobacco.
But the business lobby group warned overall economic growth is expected to remain subdued, reflecting weak household income growth and investment being held back by ongoing Brexit uncertainty.
CBI economist Anna Leach said: “Manufacturing growth remains strong, supported by the lower level of sterling and strong global economy. But risks to that growth remain high in light of international trade tensions and the uncertainty caused by Brexit.
“Make no mistake, a ‘no deal’ scenario would be immensely damaging not just for UK manufacturers, but also the rest of the EU.
“So both sets of negotiators need to demonstrate flexibility and compromise to protect trade flows worth 600 billion euros each year, particularly against the backdrop of increasing protectionist rhetoric.”
International Trade Secretary Liam Fox has said the UK can become a “21st century exporting superpower”, while outlining plans to boost exports post-Brexit.
Official figures released in June showed exports of UK goods and services hit a record £620 billion last year, accounting for 30% of UK GDP.
Mr Fox – who once accused UK businesses of being “lazy” – wants to increase exports as a proportion of GDP to 35%. However, the department has not set a timescale for reaching this ambition.
He said: “In the UK we talk about Brexit and Brexit and Brexit. It is an important issue, but it isn’t the only issue that is out there in terms of global trade.
“We must raise our ambitions, widen our horizons and expand our timescales. Europe is, and will, continue to be an important market for our goods and services, but there is a world beyond Europe and a time beyond Brexit.”
The CBI said it supported the Cabinet minister’s ambition: “We estimate that in every region of the country there are around 10% of businesses that could export, but don’t.”