Recovery in sight but stability vital for manufacturers – EEF/BDO survey
Conditions in the UK’s manufacturing sector have continued to improve in the final quarter but signs for a strong rebound in 2010 remain elusive according to a major survey released today by EEF, the manufacturers’ organisation and BDO LLP.
The fourth quarter survey confirms that the worst of the downturn is behind the sector, but confidence across manufacturing remains fragile. The upturn is set to bring its own troubles, including increased exchange rate volatility and potential supply chain risks.
In this week's Pre-Budget statement, the Chancellor should leave supportive measures in place, such as the 40% first year capital allowances for an additional 12 months until April 2011. This also means forgoing measures that would raise taxes during a recovery that will stretch companies’ working capital.
Commenting, EEF Chief Economist, Lee Hopley, said:
“Whilst conditions are continuing to improve on the back of recovering world markets and a weaker currency, there is little to suggest that we are in for anything other than a long, slow haul out of recovery. Manufacturers have been grappling with extremely difficult trading conditions for more than a year now, but we’re not out of the woods yet and a great deal of economic uncertainty remains.
“Cutbacks in investment remain of particular concern. Whilst the need to address the public finances in the long term is urgent, this must be balanced with the need to continue with supportive measures underpinning a productive sector of the economy.”