UK manufacturing output has fallen to a 15-month low as the industry anticipates a cliff-edge Brexit, according to a new report.
Stockpiling by companies ahead of the UK leaving the EU is likely to have masked an even greater decline, said business advisers BDO.
Business confidence has sunk to its lowest level since December 2016 while output in the services sector remains below the long-term growth trend, it was suggested.
Peter Hemington of BDO said: “Manufacturing firms have been ramping up their preparations for a disorderly Brexit, in large part through the stockpiling of imported goods.
“This has had the effect of inflating activity levels. So the underlying slowdown is probably rather worse than suggested by our headline figures.
“Stripping out the impact of these Brexit preparations, there is a real risk that the economy will contract in the first quarter.
“It’s too late to do anything about this now but a disorderly Brexit would be far worse than the current relatively mild slowdown, possibly disastrously so.
“We are concerned it looks more likely than ever that we will exit the EU without a deal.
“We believe that the Government should seek an extension to Article 50 as soon as practicable to give itself the time to reach an acceptable Brexit compromise.”