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The year’s growth forecast was upgraded from 2.7% to 3.9% – which, while positive, means it will take some time to recover from the 10% fall in output seen last year.
The survey – carried out by Make UK and business advisory firm BDO – showed that while UK orders have risen, export orders have remained negative despite a significant pick up in manufacturing in the EU.
“This would suggest that both UK and EU companies have yet to come to terms with the new trading arrangements, with Make UK believing that there are impacts on trade which go beyond ‘teething problems’,” a Make UK press release said. Last week, the organisation published figures showing three-quarters of companies were facing delays at ports.
While investment intentions are also still negative they are significantly improved on the last few quarters, and Make UK hopes that the budget announcement of a ‘super-deduction’ tax will provide a boost. “The UK has faced a structural problem with longstanding, relatively low levels of investment and that, given the incentive only lasts for two years, more longer-term measures will be required to make a real step change,” the announcement said.
Chief executive Stephen Phipson said: “After the seismic shock to the sector last year, manufacturers are now beginning to move through the gears and accelerate into recovery as demand at home increases and major markets also begin to pick up.
“Looking forward, we are now at an economic crossroads. We have a major opportunity for government and industry to work together on a long-term vision which ensures we take advantage of the acceleration in technologies, our capacity for innovation and world-class academic and science base. Future generations will not look back kindly if we do not grasp it.”
Richard Austin, head of manufacturing at BDO, said: “While the results of this quarter’s survey are encouraging, the next 6-9 months will nevertheless be critical for those manufacturers facing financial distress. Many will have deferred tax payments and taken on additional loans to help them through the crisis. The recently announced extension of the furlough scheme and other support measures will help in the short term. However, many will need to use this time to plan and implement turnaround strategies – and in certain cases take some tough decisions.”
The survey of 314 companies was conducted between 27 January and 17 February.
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