A critical moment

Published:  08 June, 2017

Defying predictions that political uncertainty caused by a snap election and Brexit may impact on business confidence, British manufacturers are continuing to enjoy a surge in performance on the back of a synchronised upswing in global markets according to the latest second quarter survey from EEF, the manufacturers’ organisation and accountancy and business advisory firm BDO LLP.

While the export performance does have a currency aspect to it, the survey showed that manufacturers’ views of demand prospects in exports markets have become steadily more positive over the past year. Demand in European markets looks especially buoyant with over three-fifths of companies (61%) reporting an upturn.

The survey also showed that, in contrast to recent years, positive output balances were reported across all sectors. However, those in the capital goods sector are performing especially well as global manufacturing intentions have increased. A good pipeline of orders across the industry is pushing up demand for new employees and recruitment intentions soared to the highest level in three years, whilst investment intentions were in positive territory for the third quarter in a row.

However as Tom Lawton, partner and head, BDO Manufacturing, recently highlighted, Brexit does create uncertainty and it is important that the new government is clear that Brexit will be structured in a way that serves the best interests of business. As part of this it is vital that we remain open for business and negotiate new trade agreements with the EU and other key markets so that international markets remain open and accessible as soon as Brexit is completed.

With this in mind we must all be aware and not become complacent that the current sweet spot for the sector cannot be guaranteed given the uncertainty ahead, in particular the likely continued squeeze on household incomes and the possibility of no deal on Brexit which could damage trade. These are real threats that cannot be ignored.

Therefore the messages I have been hearing from manufacturers is that the new government must press ahead as a matter of urgency with a bold industrial strategy to help cement long-term growth prospects for the sector. This is the opportunity we must seize.

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