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Will Brexit deflate Europe's bouncing factories?

Friday, July 01, 2016 - 01:45

Factories across Europe enjoyed a buoyant month in June. But, as Sonia Legg reports, that growth could be under threat after Britons voted to leave the European Union last week.

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Good news for Britain - that's not a phrase many have heard in recent days. And although positive, the latest data on UK manufacturing growth could be reason to lament. Markit's PMI - up almost two points in June to a five month high - was largely based on pre-Brexit vote surveys. SOUNDBITE (English) SENIOR FX STRATEGIST, RABOBANK, JANE FOLEY, SAYING: "There will be this big discrepancy now between the pre-Brexit vote data and the post Brexit vote data, with the post Brexit data clearly becoming far more important." It was a similar story across the Channel - euro zone factories enjoyed a buoyant month in June. They've been gradually gathering speed - only to face a road block (SOUNDBITE) (English) SENIOR FX STRATEGIST, RABOBANK, JANE FOLEY, SAYING: "What we don't know is how big the political implications of Brexit could be. Will it create less cohesion in the EU as a whole or as some politicians have suggested this week will it frighten voters in Europe back into supporting more establishment politicians the more of a mandate to reform." Germany's not immune. It's manufacturers have been steaming ahead - the new data at its highest since February 2014. SOUNDBITE (English) SENIOR FX STRATEGIST, RABOBANK, JANE FOLEY, SAYING: "It is an important market for German manufacturers. Cars for instance very popular in the UK market so the uncertainty is about how the UK's trade position with the EU will stand once the EU divorce is completed are huge at the moment." Italy is clearly worried. It's employers lobby has slashed its growth forecast for this year and next by more than half a percent. It's also warned recession will occur if a national referendum in October throws out proposed government reforms.

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Will Brexit deflate Europe's bouncing factories?

Friday, July 01, 2016 - 01:45