Optimistic outlook for global market in 2018, notes industry survey

A recently published survey has demonstrated an optimistic outlook of a growing global economy that will sustain new orders and industry growth by British manufacturers.

The 2018 EEF/AIG Executive Survey, jointly performed by the manufacturers’ organisation, EEF, and the global insurer, AIG, involved 281 senior company executives in the manufacturing and engineering sector who were questioned about the forthcoming year in November 2017.

Key outcomes of the survey include a high level of companies anticipating an improvement in global conditions (the highest proportion in four years), with 42% of companies expecting trading conditions to be better than last year, compared with 14% predicting world growth will be slower. However, in contrast to the optimism about the global economy, concerns around risks to growth were also found to be higher — 26% of companies see more risks than opportunities in 2018 compared with 23% in 2017.

Brexit continues to be a major risk for companies in 2018, although other risks, such as cyber-attacks, capacity implications of subdued investment and other international ‘what ifs’.

However, no major shifts in investment sentiment were identified by the survey with only a third of companies admitting to putting contingency plans in place for a no-deal Brexit outcome. Additionally, industry execs involved in the survey seemed as likely to be considering reshoring as offshoring activity in the year ahead in response to Brexit and exchange rate risks. On the whole, the outlook for manufacturing investment in 2018 is seemingly finely balanced.

“Manufacturers left 2017 in an upbeat mood and are set to outpace the rest of the economy again this year as the growth in global trade continues to gain momentum. That is not to say everything in the 2018 garden is rosy, however, as there are plenty of factors that could puncture this positive picture,” said EEF chief executive, Stephen Phipson. “Chief amongst these is Brexit which has put the investment outlook on a knife edge. As such, it is essential that the Government gets a transition deal as a matter of urgency and sets out with utmost clarity as to what kind of final deal it is looking for.

“In tandem with this it also needs to crack on a pace with its Industrial Strategy. This will be vital in providing manufacturers with the confidence to invest in strategies to improve their productivity and enter new markets.”

“It is encouraging to see optimism from UK manufacturers as we set off into 2018, despite the challenging economic backdrop. While the uncertainty surrounding Brexit understandably features highly in perceived risks for the manufacturing industry, it is interesting to see that cyber security is front of mind for executive leaders,” added Simon Gallimore, manufacturing industry UK lead for AIG. “A cyber-attack can swiftly interrupt the supply chain, potentially causing severe disruption to manufacturers. As technology and data start to play increasingly critical roles in the industry, companies will inevitably find themselves more vulnerable to cyber breaches.

“Manufacturing is key to the UK’s performance on the world stage, and plays important part in improving the health of the economy. Robust cyber security measures and thorough employee training on cyber security are vital to help protect against the increasing threat of attacks.”