Britain’s manufacturers have upgraded their forecasts for economic growth this year but have warned of significant risks if investment fails to make up ground lost in the last five years.
According to the half-year ‘Economic Prospects’ report by the manufacturers’ organisation, the EEF, the UK economy is set to pick up momentum this year.
The EEF says increased consumer spending remains a key driver of growth and improved confidence will support a recovery in business investment.
EEF regional director Andy Tüscher said : “The events of the last few years have heavily impacted on manufacturing but we are now seeing far more positive signs that growth will pick up.
“With the UK economy beginning to move through the gears and, glimmers of hope in the Eurozone, this should translate into more broad-based growth for manufacturing in the next few years.
“However, significant risks remain, particularly the continued failure of investment to show signs of life. We are still some way behind the previous peaks and if we are to benefit from continued research, innovation and export growth then investment needs to pick up substantially. A failure to do so could result in a build-up of problems in the supply chain and our competitive position slipping.”
The EEF expects manufacturing to contract this year due to a poor end to last year, but says output is expected to pick up in the second half of the year and expand by 1.9 per cent next year.
Continuing growth in exports, especially to non-EU markets, will be a source of growth for the sector along with recovering domestic demand.