Brexit is being blamed for dismal manufacturing numbers. Is a rhetoric recession on the way?

It has been clear for a while that the latest manufacturing data was going to be bad. But there’s Star Wars: The Phantom Menace bad, and there’s multiple Razzie award-winning worst film of all time nominee Kirk Cameron’s Saving Christmas bad. (Unfortunately I’ve seen it. It’s mostly two blokes in a car talking about God and Father Christmas and managing to make Jar Jar Binks look entertaining in the process).

The data (courtesy of the regular IHS Markit/CIPS Purchasing Managers Index) shows the PMIs were squarely in the Saving Christmas category. Anything above 50 represents growth. They limped in at 48, which is the worst performance the sector has put in for more than six years and well below the City’s already gloomy forecasts. Both factory output and new orders slumped.

This may just be the start of it. Chris Williamson, chief business economist at IHS Markit, pointed out that the ratio of forward-looking orders to existing inventory fell last month to its lowest level in seven years and the second lowest in a decade. At this rate, Britain’s manufacturers may not need to start stockpiling ahead of the next cliff edge at the end of October because they’re not getting enough orders to get rid of what they built up ahead.

“Firms are reporting that export demand is falling month on month as customers around the world are losing confidence in the future of the UK market,” said trade body Make UK. Believe in Britain, say the Brexiteers. The trouble is that thanks to them the rest of the world doesn’t.

It is true that it isn’t just Brexit that’s taking a toll. The world is slowing and trade tensions remain high, despite the latest round of talks between the US and China (Donald Trump bigged them up but few outside the White House were buying it).

Nonetheless, metal bashers and other makers say that Brexit is by a distance their chief problem. The other factors just emphasise what a terribly stupid idea it is for the Tory leadership contenders to be ramping up rhetoric about cutting off the nation’s nose to spite its face with a no-deal departure.

In the political sphere, people keep saying it won’t happen because parliament won’t allow it. The bookmakers still rate it as odds against.

However, the implied probability of 33 per cent you get from the 2-1 most bookies are offering is still uncomfortably high, and the odds just keep on falling.

They have been driven down by the rhetoric Boris Johnson and Jeremy Hunt have indulged in of late. Businesses are choosing to steer clear of the UK as a result of it, while companies on these shores are donning their tin hats and formulating plans to swing the axe should the worst happen.

Research consultancy Capital Economics has pencilled in a 0.1 per cent decline in GDP for the second quarter of the year but says this latest set of numbers heighten the downside risk.

You need two consecutive quarters of falls in GDP for it to qualify as a technical recession. If you believe the theory that parliament will act to prevent a no deal, but we nonetheless get consecutive falls in GDP, perhaps we’ll be able to call it Britain’s rhetoric recession.

Given the quality of our parliamentarians right now, and the way that “millionaire hardliners” are holding sway (as GMB general secretary Tim Roache described the situation), you’d have to be quite the optimist to rely on no deal being blocked.

Among the business community, and Britain’s manufacturers in particular, there aren’t many optimists. Sensible politicians would be ashamed. But obviously…