Complacency – our worst enemy

Published:  14 September, 2017

Britain’s manufacturers are enjoying buoyant conditions on the back of export markets going from strength to strength according to a major survey published by EEF, the manufacturers’ organisation and accountancy and business advisory firm BDO LLP.

This is obviously excellent news, and reflects the hard efforts of manufacturers, despite the continued political upheaval and uncertainty at home.

Manufacturers seem to be taking advantage of the upswing in the Eurozone in particular, as well as the synchronised upswing in global trade.

This boost in trade has benefitted all sectors, with the boost to confidence about individual firm performance translating into a positive picture for both recruitment and investment intentions in the near term. The latter is being aided by an improvement in profit margins.

Ms Lee Hopley, chief economist at EEF, highlights that: “The robust external picture should see new order in-take and production levels hold up in the final months of this year, with our forward-looking balances indicating expectations of solid activity levels in q4.”

Beyond that, she says, companies remain relatively optimistic about their own business prospects: “Our confidence indicator – a gauge of firm-level growth expectations in the next 12 months – edged higher for the second quarter running. Busy factors and solid confidence levels are inevitably translating in the need for more people and a bit more investment.”

However, looking ahead, despite the buoyant picture the cloud on the horizon remains the UK economy. Inflationary pressures have not completely subsided, with recent sterling depreciation likely to provide another ripple of price increases in the coming months.

In addition, while firms are confident of their own performance, EEF’s indicator for the UK economy has slipped for the second quarter running in response to the continued political uncertainty and squeeze on consumer spending.

Therefore it is clear that there are significant challenges ahead of us over the next 18 months, such as the continued Brexit negotiations and economic uncertainties attributed to it, however there are also opportunities such as the ongoing process of digitisation and potential new markets. We should be positive that UK Manufacturing has enough entrepreneurial spirit and technical innovation to take advantage of these opportunities and face head-on the challenges. But what we mustn’t be however is complacent – this would be our worst enemy.

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