7th September 2015
Business lobby, EEF, has cut its 2015 manufacturing growth forecast in half as result of the spate of economic woes it sees facing the UK.
The latest quarterly EEF/DLA Piper Manufacturing Outlook survey, shows that a ‘rollercoaster of risks’ caused by global uncertainty is taking its toll on UK manufacturing and now it predicts just 0.7% growth in the sector this year – half what it previously anticipated.
The group, said that uncertainty in Europe, China and Greece is casting a shadow over UK manufacturing.
It added that a “rollercoaster of risks” from the rest of the world has led to a deterioration in all of UK manufacturing’s key indicators and most notably in output and orders, where falling demand at home and abroad is taking its toll.
The group, which represents engineering and manufacturing businesses, said the balance of manufacturers reporting output growth has dropped to its lowest level since the fourth quarter of 2009 and, at -2%, contrasts sharply with manufacturers’ expectations.
In a statement, it said: “Export orders in particular have suffered, edging down again to hit a six year low in response to continued problems in Europe over the summer and the slowdown in emerging markets. Looking ahead, however, over a third of companies report seeing signs of improving demand in Europe – the UK’s biggest export market. In contrast, the proportion of companies eyeing growth opportunities in Asia has fallen.”
Based on the findings, the current economic outlook and recent weaknesses in official data, EEF is halving its manufacturing growth forecast from 1.5% to 0.7%, down from 1.7% at the beginning of the year, and is adjusting its GDP forecast from 2.6% to 2.5%
Lee Hopley, chief economist at EEF, said: “We’ve seen the future of the Eurozone on the line once again, turbulence and uncertainty over China and Greece and, of course, oil and gas are still a concern. Against this backdrop it’s no surprise that confidence is faltering and UK manufacturers are feeling less optimistic about their growth prospects for next year.
“However, it’s important to note that confidence has dipped rather than nose-dived and if the global drag lets up anytime soon then UK manufacturing should very swiftly get back into its previous stride. Industry and Government must continue to work closely together to help offset the risks and support investment and innovation in the sector.