North East Industry calls for seismic emergency budget

North East manufacturers are calling for a seismic emergency Budget on Friday on the back of a substantial revision downwards of prospects for 2023 in response to the eyewatering increase in energy and other business costs companies are facing.

The revision downwards comes in the Q3 Make UK/BDO Manufacturing Outlook survey published today which is forecasting growth for manufacturing of just 0.6 per cent in 2023, down from 1.7 per cent being forecast as recently as June. Make UK has also slashed its GDP forecasts from 3.6 per cent this year to just 0.3 per cent in 2023.

In the last quarter, the performance of manufacturers in the North East held up well with all indicators in positive territory and well above the national averages. Total orders and investment levels were especially strong compared to the national picture while recruitment intentions for companies in the North East to meet demand were the strongest in the UK.

However, despite this relatively strong picture in the last quarter given the potential for the economic situation to deteriorate further and force the sector into recession next year, Make UK re-iterated its call for Government to bring forward a ‘shock and awe’ package of policy measures on a scale in line with those seen during the worst points of the pandemic.

This is essential to prevent a permanent scarring of the economy, help protect viable companies in the North East and avert significant job losses. The measures in the statement tomorrow must set out concrete and specific actions to help business deal with escalating energy costs, as well as a range of measures to aid cashflow, provide greater access to Labour and encourage investment, especially in energy efficiency technologies.

In a worst-case scenario of companies being asked to stop production or, a reduced working week, Government should also introduce an energy furlough scheme similar to that introduced during the pandemic.

Commenting, Dawn Huntrod, region director for Make UK in the North East said: “Whilst industry has recovered strongly over the last year, the storm clouds are gathering in the face of eyewatering costs and a very difficult international environment. This threatens to shatter expectations of a sustained recovery from the pandemic and put many perfectly viable businesses in the North East at risk.”

Steve Talbot, head of manufacturing at BDO in the North East, said: “Manufacturers in the North East continue to perform well, however, with growing inflationary pressure there is great uncertainty for the sector. Input prices are at near record levels for the second quarter in a row as profit margins continue to fall.

“We hope the Government will understand the uncertain position manufacturers find themselves in with soaring energy prices. Ongoing government support designed to drive investment in energy-saving plant and machinery would also be helpful in the current circumstances.”

By Mark Adair – Correspondent, Bdaily