While the sector is growing at a good pace, this is not transferring to expansion and investment has subsequently become stunted. Brexit uncertainty and squeezed consumer spending are weighing down on businesses and are inspiring doubt on future prospects. While the UK government struggles with Brexit negotiations, the future business landscape is unclear and until this is resolved, it may remain murky.
The general momentum from manufacturers has nonetheless proven strong, despite any political anxiety. A survey of manufacturers by the Confederation of British Industry (CBI) has shown that new orders at Britain’s factories are continuing to “expand at a brisk pace”. While the report acceded that orders from abroad have slowed since Brexit, this has been slightly offset by a pick-up in domestic demand.
A strong performance can only go so far, however, and firms and their workers need to focus on investment. Particularly with the post-Brexit landscape so uncertain, the UK needs to boost its image to international economies. Investing in new technology and innovation is a clear way to keep pace with rivals, ensuring all domestic firms are as efficient and capable as international counterparts.
At the Credit Protection Association, many of our Members struggle with low demand and tough competition, and our cash flow management expertise provide the tools to allow them to fight back. Our debt recovery services provide the financial confidence to pursue investment opportunities, while our credit management products ensure future prospects are not damned by bad finances.
The manufacturing sector makes up about 10 per cent of the British economy and its performance is taken into account by the Bank of England’s policymakers when they decide whether to change interest rates.
The CBI’s quarterly gauge of factory output rose to a one-year high of 27 per cent in July, up from 13 per cent in April. The survey added that 35 per cent of businesses had reported an increase in new orders and 20 per cent had reported a decrease, giving a balance of 15 per cent, up from 14 per cent in April.
Despite the rise in activity in the CBI’s survey, manufacturers remain gloomy. Expectations about output for the next three months dipped to a four-month low among the 357 manufacturers surveyed, while investment intentions “deteriorated significantly”. Companies have said that while their spending on new machinery is stable, they have “dialled down” on training workers as well as on product innovation.