U.K. Manufacturer Outlook Slumps as Labor Fears Hit 40-Year High

(Bloomberg) -- The outlook for U.K. manufacturing is the weakest in three years amid growing concerns of skilled labor shortages before the nation’s exit from the European Union.

Companies expect output to remain unchanged in the three months to January, the worst forecast since 2015, the Confederation of British Industry said in a report Tuesday. Business optimism is falling at the fastest pace since 2016’s Brexit referendum, while expectations for skills and labor shortages are at the highest level in more than four decades, the lobby group said.

The survey provides more evidence that businesses are becoming increasingly cautious as they await clarity on future trade conditions. The CBI said that manufacturers are cutting back on investment, with capital expenditure on plant and machinery set to be reduced at the fastest pace since July 2009.

Brexit is complicating an already difficult situation for U.K. manufacturers. Globally, sentiment is also deteriorating, in part due to higher Federal Reserve interest rates and an ongoing trade war between the U.S. and China.

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