Call for government to boost economy as manufacturers feel economic chill

The research among almost 800 firms by the manufacturers’ organisation EEF and Grant Thornton showed that even with output holding up over the last few months, a stagnant UK economy and a sharply deteriorating eurozone were now impacting on all sectors of manufacturing. The survey also showed the continued dilemma facing the Bank of England as companies’ price expectations continue to rise. EEF said it therefore believed it fell to the government to address the rising risks of further economic weakness. It believes government can minimise cuts to jobs and investment and pave the way for an eventual upturn by bringing forward policies that buttress business from “gathering economic headwinds”. EEF chief economist, Steve Radley, said manufacturing had shown considerable resilience in the face of a credit crunch, a global economic slowdown and a massive increase in its costs, but there were now clear signs that these pressures were starting to take their toll on companies “Given the Bank of England’s hands remain tied in the short term, it is now essential the government tackles this turning point for the economy head on. It must avoid adding any further costs to business and put in place policies which will provide the building blocks for an upturn,” he added. Key findings included output holding up in last three months; new orders at 3 year low; domestic orders plummeting but exports remaining firm; price expectations rising; profit margins deteriorating; employment and investment intentions going into reverse; and a sharp decline in expectations Bob Hale (pictured), head of manufacturing at Grant Thornton said UK manufacturing had looked to its export markets for buoyancy this year, but it seemed many key export markets, particularly in Europe, were now coming down with the same malaise afflicting both the US and the UK. He went on: “However, exporting to emerging markets is still seen as an insulating factor and those UK manufacturers that are able should now be exploring these markets with renewed vigour. "The majority of manufacturers will now be part of the chorus calling for new Government initiatives to support the sector, as any respite will now be welcome in what is likely to be a winter of economic discontent."