Live, rolling coverage of business, economics and financial markets as 2025 starts with trepidation over new US administration’s trade policies, and global manufacturing sector struggles

And across the Channel: Britain’s manufacturing sector also reported declining output.

The UK manufacturing purchasing managers’ index (PMI) fell to an 11-month low of 47.0 in December, down from 48.0 in November and below the earlier flash estimate of 47.3, according to S&P Global. The PMI has remained below its neutral mark of 50.0 – signalling deterioration – in each of the past three months.

Manufacturers are facing an increasingly downbeat backdrop. Business sentiment is now at its lowest for two years, as the new government’s rhetoric and announced policy changes dampen confidence and raise costs at UK factories and their clients alike. SMEs are being especially hard hit during the latest downturn.

This is sending a winter chill through the labour market. December saw the sharpest cuts to staffing levels since February. Some companies are acting now to restructure operations in advance of the rises in employer national insurance and minimum wage levels in 2025.

Countries located in the south continued to outperform, with Spain and Greece showing stronger improvements in manufacturing sector conditions. Expansions here were more than offset, however, by the big-three of Germany, France and Italy, which all posted deteriorations once again. Most notable was France, which saw its manufacturing PMI sink to its lowest level since May 2020.