Going out with a bang, Britain’s manufacturers enjoy export demand despite Brexit, notes survey
Results from a major survey, conducted by the manufacturers’ organisation, EEF, and accountancy and business advisory firm BDO, have demonstrated that manufacturers in the UK are experiencing improved global demand, from European markets in particular, despite the current political uncertainty.
The EEF/BDO Manufacturing Outlook Q4 survey has shown that there is an increase in commodity prices, which is feeding growth across the manufacturing supply chain. This is reportedly compensating for weaker UK demand as the squeeze on living standards and Brexit uncertainty continues to take its toll domestically.
As a result of the strong performance across all sectors and regions, EEF has upgraded its growth forecasts for manufacturing for this year and next — this means that the sector will outperform the economy overall. Moreover, these positive conditions in the last quarter of the year mean that 2017 is the first year since the financial crisis when both output and order balances have been positive in every quarter throughout the year.
“Stronger global growth has cemented the foundations for growth in manufacturing this year, but the sector’s contribution to the UK economy has been greater than most expected. Not only have we seen consistently positive survey responses in each quarter this year, but growth has been evident across all industry segments and UK regions in 2017,” commented, Lee Hopley, EEF chief economist. “There is some confidence that this momentum will carry into 2018, but as we head towards the Brexit end game we need manufacturing to produce the same trick of broad based growth again next year. As we see more companies investing and capitalising on global growth, we’ve become more upbeat in our forecasts for the growth outlook. Government’s industrial strategy is now out of the starting blocks but it needs to maintain a steady pace on delivery of its policy commitments to anchor manufacturers’ growth and investment in the year ahead.”
“Manufacturers have continued their strong performance into the final quarter of 2017, ending the year with plenty of festive cheer. The sector’s performance is being driven by increasing demand from around the world, in particular Europe. The task of government is very clear: it needs to deliver a Brexit that minimises disruption to manufacturers — they are the economic engine of the UK economy,” added Tom Lawton, partner and head, BDO Manufacturing. “It is encouraging for manufacturers to now see further detail of the government’s long-awaited Industrial Strategy. However, it is critical that the government commits to the strategy over the long term (15 to 20 years), avoiding the disruptions of political cycles and encouraging manufacturers to commit to significant capital investments to boost growth and productivity.”
Key findings include:
- Output and order balances remain strong.
- First year in a decade since output and orders positive in every quarter.
- Gap between export and domestic orders widens.
- European markets continue to drive export growth.
- Buoyant sales and output driving more investment and recruitment.
- Business confidence improves for year ahead.
- Manufacturing forecasts upgraded for 2017 and 2018.