UK chemicals sales fall sharply, firms face ‘adverse impact’ of government policy – trade group
MADRID (ICIS)–UK chemical companies’ sales fell sharply between the third and the fourth quarter as half reported a fall in demand and exports, trade group Chemical Industries Association (CIA) said on Wednesday.
According to the CIA, the figures for the chemicals industry showed “just how bad” the country’s economic performance is.
Earlier on Tuesday, the International Monetary Fund (IMF) downgraded its UK GDP growth forecast for 2023 sharply as companies and households are set to endure higher borrowing costs and still-high energy prices.
The CIA said 53% of respondents to its quarterly business survey had reported a fall in exports to the EU in the fourth quarter.
Meanwhile, 50% said demand for their products had fallen in Q4 both at home and abroad.
The trade group also attributed some of the woes the chemicals sector is facing to the impact that climate change-related regulations, which said could deter investment in the country.
“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,” said the CIA’s CEO, Steve Elliott.
“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 [IRA], why would companies want to place money into the UK?”
Passed in August 2022, the IRA is set to prop up green investments in the US on the back of generous tax breaks, prompting fears among chemicals players in the EU and the UK about Europe falling behind in the green economy.
The CIA’s head of economic affairs, Tom Warren, said more companies had reported a fall in sales between the third and fourth quarter of 2022 than did between the first and second quarter of 2020, at the height of the COVID-19 pandemic.
“[This] 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,” said Warren.
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