UK budget should boost manufacturing investment, says industry, as survey shows recovery "well underway"

Out-Law News | 18 Mar 2014 | 2:22 pm | 1 min. read

The UK chancellor should use tomorrow's budget speech to capitalise on increasingly strong growth in the manufacturing sector, by taking action to encourage firms to invest and hire more staff, according to an industry body.

Publishing the results of its quarterly survey of activity and attitudes in the sector, conducted in association with accountancy firm BDO, manufacturing association EEF said that performance across all UK regions and industrial sectors had been "more consistent than in recent quarters". Output and orders across the 300 firms surveyed were in line with industry expectations for the first quarter of the year, while overseas sales were also improving, it said.

Lee Hopley, EEF's chief economist, said that the most notable trend recorded by the survey was the improvement in firms' recruitment and investment intentions, both of which reached record highs over the survey period. She said that the challenge for the UK government was to turn firms' intentions into action.

"This is the most positive set of indicators we have seen for some time, demonstrating that we've not just turned the corner, we're actively heading down the right road," she said. "Manufacturers are clearly feeling more confident as their order books fill up and exports are strong. It is now vital that government does all that it can to underpin support for companies, giving manufacturers the confidence to fulfil their investment and recruitment plans."

According to EEF, surveyed firms operating across all subsectors increased employment over the survey period, with the strongest figures in the motor vehicles and electronics sectors. In addition, a positive balance of 31% of surveyed firms planned to increase employment over the next three months, while a positive balance of 34% planned to increase investment.

EEF's forecast for manufacturing growth in 2014 remains unchanged at 2.7%, compared with its 2.6% growth forecast for the economy as a whole.

However, EEF has previously warned that firms' recruitment intentions could be affected by a lack of available workers with sufficient skills. It has been particularly critical of the impact of government immigration policy on the ability of manufacturers to recruit graduates from outside the European Economic Area (EEA) qualified in the 'STEM' fields: science, technology, engineering and manufacturing.

According to EEF, four in ten of its members that have recruited a non-EEA graduate over the past three years have had difficulty in securing a sponsorship licence. Almost half of recruiters have also had difficulty obtaining a visa for their non-EEA graduate employee, it has said.

BDO's head of manufacturing, Tom Lawton, said that it had been "some time since all sectors have been moving in the right direction".

"This should also give confidence to the government that its support for the sector is starting to achieve the desired results and if implemented in a clear and carefully targeted fashion will continue to reap benefits," he said.