Partner Article

Manufacturers forecast long slow haul to recovery

Britain’s manufacturers will only see a “muted recovery” in 2010 before posting stronger growth in 2011, according to an economic forecast published by EEF, the manufacturers’ organisation and accountants and business advisers BDO LLP.

The upturn in 2011 will follow export led growth, a weaker pound and a pick up in world trade, says the Economic Prospects 2010 report.

The report forecasts that manufacturing will grow by 1.2% this year before picking up to 3.4% in 2011. But the report also forecasts the performance of individual sectors is set to sharply diverge, with some enjoying strong growth whilst others with longer lead times are only just about to see a downturn.

The report also highlights that risks to growth remain, not least from continued credit constraints and the impact of the electoral cycle on economic performance.

EEF Region Director, Alan Hall, said: “Last year was a record year for all the wrong reasons and the outlook for the UK economy this year is far from certain, with little momentum behind a recovery until the latter part of the year. While a stronger global economy and weaker exchange should help pull the UK back to growth, benefiting manufacturers in particular, things could still go wrong.

“The outlook for different manufacturing sectors is also highly variable. Whilst some can safely say the worst is behind them others are only just beginning to feel the chill. In what will be an uncertain world in 2010, companies will still be looking for stability from policy makers.”

Jason Whitworth, Corporate Finance Partner, at BDO LLP, who aided EEF with the report, said: “Manufacturers will need to continue to implement cost-cutting measures, including staff reductions, to maintain profits in what will continue to be a very challenging market. “I have concerns that the early period of 2010 could prove very difficult and possibly fatal for some manufacturers.

“We feel that more significant growth in activity levels should begin in earnest towards the end of 2010 and gain momentum into 2011. Manufacturing remains very much in business in the UK.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .