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Manufacturers end year in optimistic mood
Published:  21 December, 2017

Britain’s manufacturers are ending the year with a bang on the back of the continued improvement in global demand and increased export performance, according to a major survey published by EEF, the manufacturers’ organisation and accountancy and business advisory firm BDO LLP.

According to the EEF/BDO Manufacturing Outlook Q4 survey, manufacturers are continuing to ignore the ongoing political uncertainty at home as improved global demand, from European markets in particular, and the increase in commodity prices is feeding growth across the manufacturing supply chain. This is compensating for weaker UK demand as the squeeze on living standards and Brexit uncertainty continues to take its toll domestically.

This strong performance, across all sectors and regions, has led EEF to upgrade growth forecasts for manufacturing for this year and next, meaning the sector will outperform the economy overall. Furthermore, the positive conditions in the fourth quarter mean that 2017 will be the first since the financial crisis when both output and order balances have been positive in every quarter throughout the year.

The bounce in business conditions seen over the course of this year is driving the need for investment in more capacity to fulfil increasing customer demands. As such we’ve seen the second successive improvement in investment intentions, with the balance of companies planning more capital expenditure hitting a three and a half year high.

Commenting, Ms Lee Hopley, EEF Chief Economist, said: “Stronger global growth has cemented the foundations for growth in manufacturing this year, but the sector’s contribution to the UK economy has been greater than most expected. Not only have we seen consistently positive survey responses in each quarter this year, but growth has been evident across all industry segments and UK regions in 2017.

“There is some confidence that this momentum will carry into 2018, but as we head towards the Brexit end game we need manufacturing to produce the same trick of broad based growth again next year. As we see more companies investing and capitalising on global growth, we’ve become more upbeat in our forecasts for the growth outlook. Government’s industrial strategy is now out of the starting blocks but it needs to maintain a steady pace on delivery of its policy commitments to anchor manufacturers’ growth and investment in the year ahead.”

As a result of the strong conditions for manufacturing through 2017 and the positive outlook for 2018 EEF has upgraded its forecasts for the sector to +2.1% and 1.4% respectively. This is faster than the UK economy overall where, in line with the OBR forecasts at the Budget, EEF expected tepid UK growth of 1.5% in 2017 and 1.3% in 2018.

The survey covered 347 responses and was carried out between 1 and 22 November.

Stephen Phipson joins EEF

as new chief executive

Stephen Phipson has become the new chief executive of EEF, the Manufacturers’ organisation, succeeding Terry Scuoler.

Stephen has a wide range of experience in both Government and advanced manufacturing companies. He was formerly head of the Defence and Security Organisation (DSO) within the Department for International Trade where he was responsible for providing UK Government export support to the UK defence and security industry.

Prior to heading up DSO he was Director for Security Industry Engagement at the Home Office, before which he spent thirty five years in a range of large and small manufacturing businesses.

His period in industry has included roles as chief executive officer of Stadium Group plc and President of Smiths Detection, one of the world’s leading security companies, developing business with more than one hundred Government Agencies around the world.

He has also held senior management roles with Radiall, Phillips and Plessey and was awarded a CBE for services to the security industry in 2010.

Commenting, Stephen Phipson said: “I am looking forward to taking the reins at EEF at such a pivotal moment with the Brexit talks reaching a critical point and the launch of a modern Industrial Strategy. EEF has a vital role to play in working with Government across all fronts to ensure our sector continues to flourish and strengthen its world class innovation and competitiveness.

“One of my first priorities is to reinforce the need for a status quo implementation period for industry agreed in principle, if not in full, as soon as possible. Further delay would mean more uncertainty for companies here and across Europe, which despite UK manufacturing's current strong performance both domestically, and in exports, would damage our longer term prospects.”