Region’s manufacturers call for growth boost in Autumn Statement as demand weakens – EEF/BDO survey

Manufacturers in the South East reported worse than expected results in the last three months and foresee a further downturn in orders and outputs in the first quarter of 2013, according to a major survey from EEF, the manufacturers’ organisation, and accountancy firm BDO LLP published today.

In Q4 2012, total orders and output were expected to balance at +22% and +32% respectively but weakening conditions seen through the course of this year finally took their toll with indicators falling to +17% and 8%.

Looking forward, manufacturers in the region are also circumspect about the first three months of next year, predicting a further fall of orders and output to a balance of zero. Additionally, recruitment intentions are forecasted to fall from a balance of -4 to -18% in the next quarter.

Commenting, EEF South East Region Director, Jim Davison, said: “There is little positive news in these figures. We’ve seen growth ebb away during the course of the year and many manufacturers are steeling themselves for a continuation of tough trading conditions in the next few quarters. The extent to which industry confidence has fallen since this year’s Budget makes it ever more urgent for the government to get to grips with growth and get behind companies seeking to invest and succeed in new export markets.

Kevin Cook, Partner at BDO LLP in the South East, said: “A depressing picture of the region’s manufacturing sector has been painted in this quarter’s survey, for all but a few sectors and companies. There is a reduction in exports which is particularly concerning and, whilst this mostly reflects the turmoil in the eurozone, it also highlights the scale of the challenge in growing exports to emerging markets to offset the downturn in much of Europe.

“This survey shows that the sector is nowhere near where the government wanted it to be two years ago and emphasises the need for a long term industrial policy focused on manufacturing.”

On the back of the survey a call for a concerted, joined up, cross- government growth plan has re-iterated ahead of this week’s Autumn Statement.

Mr Davison, EEF, continued, “This week the Chancellor must send a strong signal to industry that it is getting a firm grip on the levers of growth. We need to get business investment going again. The Autumn Statement should prioritise measures to support business investment through the tax system and, to increase competition in business banking. But, individual measures are on their own are not enough. They should be part of a Growth Plan that demonstrates to business that all of government has a week-in, week-out focus on growth”

EEF used the survey to re-iterate its call for measures to boost growth and investment in this week’s Autumn Statement. In particular, EEF is calling for the following immediate key measures:

1) Access to Finance
An immediate review of the SME Banking system to include options for switching bank accounts more easily. Government should also use the £1billion currently earmarked for a British Investment Bank to set up a Challenger Bank to the big four.

2) Tax and Investment
A time limited 100% first year capital allowances for two years. The UK current has the least generous capital allowance system of any country in the OECD bar Chile, whilst evidence from similar schemes introduced in the US and Canada has indicated a substantial boost to private sector investment.

3) Infrastructure
A re-allocation of the £5.3bn underspend by government departments in 2011-12 towards investment in infrastructure.

4) Skills
A reduction in National Insurance Contributions for employers investing in higher level Apprenticeships.