LONDON (REUTERS) – Britain’s manufacturing industry warned of a potential ‘knockout blow’ if Prime Minister Boris Johnson is unable to secure a trade deal with the European Union before temporary transition arrangements end on Dec 31.

Make UK, the trade body for British manufacturers, said it was slashing its growth forecast for the sector in 2021 to 2.7 per cent from 5.1 per cent just three months ago – roughly half the rate of growth it sees for the broader economy.

“Combined with the pandemic, many in industry are feeling like an exhausted boxer in the final round of a bout, with a ‘no deal’ exit from the EU potentially landing a knockout blow,” Make UK’s chief executive Stephen Phipson said.

Official data last week showed that British factory output in October was 7.1 per cent below its level a year earlier.

British manufacturers will face tariffs on many of their exports to Europe from Jan 1 without a trade deal, as well as regulatory hurdles.

Imports have already been disrupted due to high volumes of traffic at ports, linked to Covid-19 and Brexit-related stockpiling, prompting carmaker Honda to suspend operations temporarily last week due to parts shortages.

Make UK said its members expected output to stagnate or fall slightly over the coming quarter – better than the record drops seen in previous quarters due to the pandemic, but overall an anaemic picture.

“It is going to be a long haul back, with talk of a ‘V’-shaped recovery nothing more than fanciful,” Phipson said.

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