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EEF hails UK manufacturing boom as activity ‘steps up a gear’

The EEF has hailed a UK manufacturing boom, as activity 'steps up a gear' and healthy output, order balances and growing export demand contribute to a boost in UK firms' recruitment and investment.

British manufacturing looks set to have a strong 2018, with output likely to outpace growth in the rest of the UK economy, a new report shows.

The content of the report, released today by manufacturers’ organisation EEF, has been seized on by both supporters and opponents of Brexit – with the former claiming that fears of an economic slowdown are unfounded, while the latter say statistics underline the importance of the European Union single market.

Data from UK manufacturing has been “nothing but positive” and “particularly upbeat” since the turn of the year, according to EEF, whose own chair Dame Judith Hackitt has previously said the UK would “spend the next thirty years repenting” if it quit the EU too soon.

Businessman John Mills, one of the leading lights of Vote Leave, has decried such pessimism. Last year, he told E&T that Britain’s trade deficit with the EU could be reversed as a result of the country quitting the EU, adding: “I don’t know why she [Dame Judith] doesn’t seem to see this.

“The reason why we’ve got this huge trade deficit is we’ve got so little to sell to the rest of the world. That’s the problem we’ve got. Manufacturing is 10 per cent of GDP. In Germany it’s 23 per cent, I think. In Switzerland, it’s 19 per cent.”

EEF reported a continued improvement in global demand and a pick-up in the UK market, with the EU in particular offering good prospects for growth.

The organisation said the importance of European markets showed it was essential the Government seeks a Brexit agreement which maintains trading arrangements. However, it added that manufacturing firms were ignoring the ongoing political uncertainty by pressing ahead with investment and recruitment.

EEF chief economist Lee Hopley said: "Manufacturing activity stepped up a gear through 2017, providing industry with some decent momentum coming into this year.

 “The importance of a buoyant global economy to export-focused manufacturing sectors is again reinforced, with growing overseas demand encouraging international manufacturers to ramp up their investment which in turn is spurring particularly strong activity in UK capital goods sectors.

“While this will help top line growth in UK industry and the wider economy, it's also important that the global race to increase investment and adopt new technology is not one in which the UK is left behind.”

Tom Lawton, of business advisers BDO LLP - which helped with the study, added: “Throughout 2017, the UK manufacturing sector proved itself to be remarkably resilient and delivered a strong overall performance and it is promising to see this is being continued into the first quarter of 2018.

“With healthy output and order balances and growing export demand, manufacturers are continuing to recruit and invest - providing a much needed boost to the UK economy.”

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