Commentary: Brexit blues hit chemicals

UK autos is one of several sectors suffering after the vote Edmund Sumner/View Pictures/REX/Shutterstock

It’s been more than a month now since Britain’s electorate voted to leave the European Union, and the immediate impact to the chemical sector and economy is now becoming more apparent.

On 26 July ICIS published its Europe ICIS Chemical Market Confidence Index (CMCI) showing market sentiment on current business conditions had fallen sharply in July month on month.

The sharp fall in confidence in business conditions compared with 12 months ago shows the direct impact the financial instability caused by the Brexit vote has had on the chemical industry and follows warnings from German chemical trade group VCI, the IMF and others of its impact on European GDP growth.

Views on future business conditions over the next 12 months are broadly unchanged from their June level, although this hides a sharp polarisation between persona type and position in the market.

In other sectors the most recent business sentiment surveys paint a gloomy picture. Despite a sterling performance by the country’s auto industry in the months leading up to the vote, the country’s Society of Motor Manufacturers and Traders’s members are now pessimistic about the outlook for investment, employment and growth. Trade groups representing retail and building surveyors also published gloomy survey results depicting weaker conditions for construction and jobs.

A survey by business lobby group the CBI plus evidence from retailers suggests sales and orders – particularly in food and furniture – fell steeply in the aftermath of the vote. Retail group Lloyds Bank announced on 28 July that it plans to cut 3,000 jobs and close 200 branches. Meanwhile real estate group Countrywide has warned that the UK property market is weakening post-Brexit vote, especially in London and the southeast.