Publishing its submission, together with twelve other manufacturing organisations, EEF believes that the economic environment for manufacturing is the worst for at least 30 years with output set to contract by close to 10% this year.
The need for short term measures to have an immediate impact is therefore becoming increasingly urgent. These should focus on minimising additional costs on businesses, alleviating cashflow pressures facing manufacturers and supporting vital long term investment. In addition, EEF is also calling for the introduction of a temporary scrappage incentive scheme for the motor vehicles sector.
Commenting, EEF Chief Economist, Steve Radley, said:
"The Chancellor has made a good start by staggering the increase in Business rates companies were facing this year. In the meantime, acute pressures remain and threaten to undo the great strides made by manufacturers in recent years to improve its performance. Without further action we risk further hollowing out of the supply chain and the loss of viable companies in key sectors.
"The government must back its rhetoric on the need for a more balanced economy with firm actions targeted at supporting companies’ efforts to retain skilled employees and maintain investment."
In particular, previous changes to the tax system have created a less favourable environment for manufacturing investment. But decisions on capital expenditure that are delayed or reversed now will have consequences for competitiveness come the upturn. EEF is therefore calling for a temporary increase in the annual investment allowance from £50,000 to £250,000.
"The long term competitiveness of UK manufacturing will depend on companies maintaining investment in leading edge technology and equipment. At a time of increasing international mobility when many companies are looking at where to base their operations this would send a signal that the UK is a good place to invest" said Mr Radley.
EEF also re-iterated its call for measures to protect skilled employees and support companies’ efforts on short time working. This would include a more flexible system of per day payments that companies can access for a proportion of their workforce, up to a maximum of 17 weeks. These should be linked to flexible training in order to support ongoing improvements in productivity.
In addition, EEF has also made the following recommendations:
• restoration of relief on business rates on empty property
• subject to state aid rules a temporary extension of a payable R&D tax credit to large companies engaged in low carbon innovation projects
• introduction of a temporary scrappage incentive scheme for the motor vehicles sector
• measures to underwrite trade credit insurance
• increases in indirect taxes such as the climate change levy and landfill tax should be postponed and held at their current levels
• full use of the three year period available to implement the temporary agency workers directive
ENDS
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.