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UK Manufacturing Set to Grow

UK Manufacturing Set to Grow

According to a report by financial firm BDO and manufacturing body EEF UK manufacturers are not likely to see the continuation of recent growth trends in the near future.
Despite recovering more quickly than expected the prospect of greater global economic uncertainty and financial market volatility thorughout the rest of this year could pave a rocky road for UK manufacturers during the second half of 2010.
Driven largely by robust economies in the developing world the Economic Prospects report from BDO and EEF state manufacturing will grow by 3.8 per cent this year and 3.4 per cent in 2011 outstripping that in the economy as a whole.
However, overall growth for manufacturing will mask sharply diverging performance of individual sectors. Some will enjoy strong growth on the back of weaker sterling and demand from emerging markets, while others will show only moderate prospects for this year and beyond given uncertainty in developed markets.
EEF’s midlands director Martin Wassell said: “Manufacturing has exceeded expectations so far this year with a broad based recovery based on growth in world trade, a weaker pound and restocking. But with looming spending cuts here and, more uncertainty in key markets, the prospects for different sectors could diverge over the coming year.
“Overall the road to more stable economic conditions is likely to be an uneven one. Policymakers also face a mixed outlook in pursuing the widely accepted need to rebalance our economy as investment looks like it will remain a weak point in the remainder of this year with risks and uncertainty still lingering for both manufacturers and the wider economy. Whilst we have more clarity over the government’s fiscal ambitions, attention is now turning to where the cuts will hit and the difficult balancing act facing the Bank of England and when the MPC will make the next move.”
Tom Lawton, the head of manufacturing at BDO, added: “The better than expected results in the first half of the year have meant that manufacturers have remained buoyant about the economic outlook. However, there is an underlying nervousness within the sector. We still don’t know how the spending cuts announced in the last budget will impact demand for manufactured goods, while a reduction in government support could also hit the UK’s competitiveness in the global marketplace.
“However manufacturers should remain optimistic. Despite the EU economic slowdown, there are fantastic opportunities for growth in other countries like China and India. We welcome the recent UK trade delegation’s visit to India. However if the coalition government is to truly enable international growth in new markets, they must work closely with the banking sector to ensure appropriate financing structures and support is in place to enable businesses take advantage of new export opportunities.”

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