Global slump ‘will force UK factories into deeper recession’…(The “Western World” Is Toast!)
Manufacturers expected to cut investment as oil prices head towards $20 a barrel mark
By Peter Spence, Economics Correspondent
TelegraphUK
16 Jan 2016
Tumbling oil prices will force Britain’s manufacturers to cut back on investment, as the sector is stuck in a “deepening recession”, economists have warned.
The UK’s factories are likely to scrap capital spending plans as signs of a global slowdown have renewed the oil price rout. The slump, from $115 a barrel in the summer of 2014 to below $30 for the first time since 2004, has already forced change in the manufacturing sector.
Analysts at Goldman Sachs and Morgan Stanley have warned that Brent crude could drop still further, to as low as $20 a barrel. Standard Chartered has said that prices could dive to $10.
An EEF survey revealed that more than 20pc of manufacturers have said they intend to slash investment spending if oil drops to $20, while less than 15pc intended to raise capital expenditure if crude falls to those levels.
“The collapse in the oil price, which started around 18 months ago, prompted investment plans in oil and gas exploration and extraction to be scaled back or cancelled,” said Lee Hopley, chief economist at EEF, the manufacturers’ organisation.
“Further declines in the oil price will continue to depress orders in 2016 and push any likely recovery in investment plans for these sectors further out into the distance.”
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