Manufacturers confident despite Brexit fears
UK manufacturing firms are mildly optimistic about the upcoming year despite continuing uncertainty about the implications of the pending withdrawal from the European Union, an EEF study has revealed.
The manufacturers’ organisation EEF found that although half of the surveyed firms expect overall economic conditions to worsen, firms still hope to see an increase in sales.
“Global political upheaval means that 2017 looks set to be another bumpy ride, with manufacturers forced to navigate uncertainty, unpredictable economic conditions and a number of risks that have been amplified by Brexit,” said EEF chief executive Terry Scuoler.
“Against this backdrop a smooth journey is far from guaranteed, but firms are strongly attuned to the challenges and remain fully focused and determined to deliver on their long-term plans for growth.”
About 300 companies took part in the survey, of which some 50 per cent admitted they forecast more risks than opportunities in the upcoming year.
Separately, a report by the Federation of Master Builders (FMB), found that construction firms are already feeling the squeeze of the Brexit uncertainty due to the depreciation of the pound, which has caused increases in the cost of materials.
The cost of timber, for example, has risen by 20 per cent while Spanish slate saw a 22 per cent price rise.
“Thousands of smaller building firms are grappling with the rising cost of materials caused by the depreciation of sterling since the EU referendum,” said Sarah McMonagle, director of external affairs at the FMB.
“More than 70 per cent of smaller building firms have experienced increased costs as a result of the weakened currency, with additional increases of 10-15 per cent expected as the new year unfolds.”
However, the weaker pound has had a positive effect on exports, sending business confidence to a 15-month high, according to accountancy firm BDO.
“British businesses are feeling pretty confident at the moment, helped by the impact of the currency depreciation on export competitiveness,” said BDO's Peter Hemington.
“There's also a feeling out there that the world economy is picking up again as we go into 2017. Brexit may mean gloomy news in the press and, at times, chaos in government, but our business community is getting on with it on the basis that opportunities for growth are there to be grabbed.”
The EEF was strongly in support of remaining in the European Union ahead of the Brexit referendum in June last year. The organisation and its member firms are concerned about losing the access to the European Single Market as well as about not being able to easily and promptly hire European workers, who are essential to plug the UK skills gap.
“Britain's manufacturers are a vital source of good jobs and exports, but today's findings highlight the serious challenges they face in 2017,” commented Clive Lewis, shadow business secretary. “British businesses desperately need certainty and a plan from Government so they can invest in their future.”
A Business Department spokesman said: “This Government is working closely with industry, and the EEF, on developing an industrial strategy that will increase productivity, upgrade skills and ensure manufacturers are well placed to take advantage of future opportunities.”