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3 December, 2018 - 11:42 By Kate Sweeney

Region’s manufacturers lead UK with export surge and investment plans

East of England manufacturers saw a mixed picture in the final months of the year in response to a cocktail of factors related to Brexit uncertainty, weaker global growth and the impact of protectionist policies according to a major survey from EEF, the manufacturers’ organisation, and business advisory firm BDO.

According to the Q4 EEF/BDO Manufacturing Outlook survey, output contracted sharply to a balance of +3 per cent, whilst domestic orders fell into negative territory for the first time since 2016 at a balance of -6 per cent.
In contrast, however, export orders, which have been a big driver for manufacturing in recent years bucked the national trend and grew to +24 per cent – well above the average for other UK regions.

This mixed picture is reflected in weaker recruitment plans by companies in the region which fell negative for the first time since 2016 to -3 per cent. By contrast, investment intentions bucked the national trend by rising to a balance of +26 per cent, the best performance of any UK region. This compares to a national balance for investment intentions of just +7 per cent.

Confidence going forward in the East of England is also strong compared to other UK regions and reached its highest level since 2013.

Whilst EEF has revised upward its growth forecast for manufacturing for 2018 from 0.9 per cent to 1.1 per cent as a result of the weaker outlook and uncertainty it has downgraded its forecast for 2019 to just 0.3 per cent from 0.5 per cent. GDP forecasts remain unchanged for 2018 and 2019, both at 1.3 per cent.

Charlotte Horobin, region director for EEF in the East of England, said: “The moderation in manufacturing performance over the course of this year was not unexpected but in the final quarter there are more clouds on the horizon than there have been for some time.

“This should come as no surprise given the significant political uncertainty at home which is why it is essential that there is an agreement for the UK’s withdrawal from the EU as soon as possible.

“If everything that can go right does then business and consumer confidence should hopefully gather some steam next year with improved prospects for growth. That’s the backdrop we’re working to, let’s hope it’s the right one”
Keith Ferguson, partner and head of manufacturing at BDO in the East of England, added: “Manufacturers in the East of England have remained reasonably confident over the course of the year; however the results this quarter show there is a bumpy road ahead.

“One huge positive is their export performance. UK-wide, there has been a sharp decline in export orders; however regional firms have bucked the trend in the last quarter of the year and outperformed the regional average.

“Overseas demand has helped sustain manufacturing growth over the last few years and the EU remains the most important trading block for manufacturers. It is crucial that we are seen to be open for business with the EU and other key global markets.

“The result of the ‘meaningful vote’ next week will dictate the Government’s next steps and hopefully provide some much needed certainty as we enter the new year.”

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