While EEF’s latest forecasts point to a sharp contraction in manufacturing output this year, of around 11%, they also indicate that the worst is now behind us. For the past six months manufacturers have been grappling with a collapse in global demand, but attention is now turning to preparing for the upturn.
This week’s Budget should focus on helping manufacturers prepare for the upturn by supporting investment in modern machinery and innovation. A temporary increase in the Annual Investment Allowance from £50,000 to £250,000 and a temporary extension of the payable R&D tax credit to large companies engaged in low-carbon innovation projects would give companies the competitive edge when demand returns.
For the longer term, the Chancellor must also send a strong signal to industry about how government policy intends to deliver a broader base for growth across the UK economy. The government needs to outline how it will use its influence as a customer, a regulator and an investor to redress the serious imbalances in the economy and ensure we can meet the long term challenges, such as climate change, with our domestic capabilities.
Commenting, EEF Chief Economist, Steve Radley, said:
"This is also an opportune time for the government to outline its commitment to a strategy for the long term. Manufacturers are preparing for the upturn and are looking for the Budget to provide forward-looking and positive measures to help them cement their competitive position for the future and a framework for how it will support them to achieve this."
EEF also included the following recommendations in its submission.
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introduction of a temporary scrappage incentive scheme for the motor vehicles sector
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restoration of relief on business rates on empty property
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measures to underwrite trade credit insurance
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increases in indirect taxes such as the climate change levy and landfill tax should be postponed and held at their current level
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full use of the three year period available to implement the temporary agency workers directive
ENDS
Notes to Editors
EEF will be publishing its own proposals on industrial activism in a report on the future of manufacturing to be published in June
Further up to the minute news on EEF’s views on the economy visit ‘Reality Check’, (www.eef.org.uk/realitycheck) an online source of economic data, insight and assistance, updated daily by EEF’s team of economists, analysts and business specialists.
EEF, the manufacturers’ organisation is the representative voice of manufacturing in the UK together with ECIA, the Engineering Construction Industry Association and UK Steel. The EEF has a growing membership of almost 6,000 companies of all sizes, employing some 900,000 people from every sector of engineering, manufacturing, engineering construction and technology-based industries.