London – In the wake of the International Monetary Fund (IMF) prediction that the UK economy will contract by 0.6% in 2023, trade body Chemical Industries Association (CIA) has released a survey indicating that the UK’s chemical industry has seen a sharp decline in sales during Q4 2022.
The chemical industry is one of the UK’s biggest manufacturing exporters, and it performed strongly during the Covid pandemic. However, the IMF predictions suggest the UK will be the weakest economy in the developed world through 2023, underperforming even sanctions-hit Russia.
More than 53% of respondents to the CIA’s business survey reported a fall in exports to the European Union in the final quarter of 2022, while 50% experienced falling demand from the domestic and non-EU market. The CIA says that the challenging business climate for the country has been compounded by obstructive Government policy.
CIA chief executive Steve Elliott said: “We knew we were heading for challenging times, but the extent of contraction is worse than feared. As an industry we stand ready to deliver growth and deliver net zero for the UK, but we cannot do that while the policy framework kills off any incentive for manufacturing investment in our country.
“When a typical UK chemical business not only has to report on 17 different climate change measures, before even trying to compete with a far more attractive US investment climate, driven by the Inflation Reduction Act, why would companies want to place money into the UK? Chemical businesses are committed to net zero – our staff and our customers rightly demand this, as does society – and many of our companies make the raw materials that will help deliver that net zero ambition, but to expect them to do so when their hands are tied behind their backs is simply unrealistic.”
On a brighter note, CIA members are expecting an upturn in the economic climate in H2 2023.
CIA’s head of economic, Tom Warren said: “The fact that more CIA members reported a fall in sales in between the third and fourth quarter of 2022 than did between the first and second quarter of 2020, which was the height of the pandemic, shows how challenging the end of last year was for chemical manufacturers. Action is needed from Government in 2023 to convince international investors that the UK really is a place to do business.”