For many years, policymakers have longed wistfully for a rebalancing of the economy towards production rather than consumption. The latest survey of purchasing managers from CIPS/Markit shows that a modest re-adjustment is now under way.

Despite the easing back in the purchasing managers’ index (PMI) in December, the performance for the fourth quarter of 2017 as a whole was the strongest for more than three years. Order books are strong and the price pressures caused by the pound’s fall in the second half of 2016 have started to abate. Analysts say the evidence from the PMI survey is consistent with manufacturing growth of around 1 percent a quarter — an encouraging performance by the U.K.’s recent standards.

But not nearly as encouraging as that of the eurozone, which is at its highest level since the survey was first published two decades ago. The U.K.’s PMI for December stood at 56.3; that for the eurozone stands at 60.6. The gap has not been wider for almost a decade.

It appears to be healthy demand from Europe, North America and the Middle East that is helping U.K. exports, with a more competitive currency a secondary factor. That’s because firms have seen the fall in the value of the pound as an opportunity to plump up their profit margins rather than to cut prices and sell more.

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