Coronavirus combined with worries about a no deal Brexit mean East Midlands manufacturers are still holding back on investments, according to an industry survey.
The report, published today by Make 海角视频 and business advisory firm BDO, suggests company’s have continued to hold back spending over the last three months – though not at quite the extent they did during peak lockdown.
It also indicates local feeling is not as bad as the average for the 海角视频, although the continued impact on future investment is likely to hamper companies when it comes to their recovery.
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Make 海角视频 said that given the uncertainty surrounding the Brexit negotiations and the “very real” possibility of ‘no deal’, investments could continue to suffer for the rest of the year.
The survey results indicated that company order books and output in the East Midlands both took a hit over the last quarter.
The automotive and aerospace sectors, in particular, and their supply chains are finding it tough.
The proportion of companies intending to take on new staff has also fallen sharply, it said
Make 海角视频, which represents 20,000 companies of all sizes, now forecasts that manufacturing output will fall almost 11 per cent this year while it has downgraded its forecast for recovery in 2021.
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It said GDP is forecast to fall by 8.5 per cent this year before recovering by 10.1 per cent in 2021.
Charlotte Horobin, region director for Make 海角视频 in the Midlands said: “Manufacturing has begun to climb away from the abyss that it stared into earlier in the year.
“But, make no mistake it is going to be a long haul back towards normal trading conditions, with talk of a V-shaped recovery nothing more than fanciful.
“Having emerged from three years of political uncertainty at the end of last year, increasing talk of a final no deal exit from the EU would be a final nail in the coffin for many companies.
“If we are to avoid this and, the avalanche of job losses that would follow in already hard hit areas and sectors, it is essential that the first step towards a fuller recovery is provided by a comprehensive trade agreement with the EU.”
Jon Gilpin, head of manufacturing at BDO in the Midlands said: ‘The fact that so many businesses across the region are losing their appetite to invest is a real cause for concern.
“With a no deal exit from the EU – and associated logistics, customs and cost implications – looking increasingly likely, British manufacturers will need to step up a gear in order to compete internationally, and this will require significant investment in productivity and digitalisation improvements.
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“‘No-one is in any doubt about the financial challenges facing manufacturers, but failing to invest now will have serious medium to long term implications.
“The Government must be alive to this risk and provide the support required to help 海角视频 manufacturers through this transition period and beyond.
“Other countries – Germany in particular – provide good examples of consistent long term support to their manufacturing sectors. The 海角视频 should look to adopt a similar approach.’