Smaller UK manufacturers already feeling Brexit strains

The process of Britain's departure from the European Union has already hurt around 40 percent of small and medium-sized British manufacturers, an industry survey showed on Wednesday.

The quarterly National Manufacturing Barometer, conducted by business consultancies SWMAS and Economic Growth Solutions, chimed with other surveys showing robust manufacturing activity right now, but nervousness about the future.

While 45 percent of small- and medium-sized (SME) manufacturers expected profits to improve over the next six months, a similar proportion thought business conditions will deteriorate once Britain leaves the European Union.

"SME manufacturers are sending a clear message to government. The vast majority want to see free trade with the EU maintained to help minimise the cost of imports and keep red tape to a minimum," said Simon Howes, chief executive of the Exelin Group, which owns SWMAS.

"Some manufacturers are already seeing the cost of materials rise due to recent falls in the value of sterling against the euro and uncertainty over the future of the UK's trade arrangements with the EU."

The survey showed 41 percent of manufacturers thought the Brexit process had already had a negative impact on their business.

Half of the respondents cited a free trade agreement with the European Union as their top priority. Earlier this month Britain outlined plans for a future customs agreement with the EU and an interim deal to ease companies' Brexit concerns.

One senior EU official described such proposals as "fantasy".

SME manufacturers' investment intentions slipped compared with the previous quarter, the survey showed.

Sources of growth like net trade and investment have yet to compensate for the consumer-led slowdown, as the Bank of England hopes, according to the latest official data.

The National Manufacturing Barometer was conducted in July and had 331 respondents.