“Buoyant” manufacturing sector needs good Brexit deal, industry warns

A weak pound and strong global economy have helped UK manufacturing remain strong but the outlook for 2018 is gloomier, a trade body has warned.

Manufacturers group EEF said the results from its latest quarterly survey showed that “a combination of the weaker exchange rate and enduring healthy demand conditions should see exports continue on the up”, with factory production at its highest level since 2014.

However, despite Brexit uncertainty being “less of a drag than previously expected” for 2017, EEF’s forecast for 2018 remains low.

The EEF revised its growth projection for 2017 from 1 percent to 1.3 percent. For 2018 growth slides to just 0.5 percent.

EEF chief economist Lee Hopley called for “a bold industrial strategy” to be “set in stone” by the next government.

Hopley said crashing out of the EU with no deal and increased pressure on household incomes could harm trade and highlighted the rising costs of raw materials, skills shortages and a lack of investment as dangers to the sector.

She said: “While growth and confidence hasn’t been knocked off track by the snap election, it is not plain sailing from here.

“There is the continuing challenge of managing input cost increases; ensuring success in attracting and retaining the skills that are in increasing demand and driving up investment in the sector.

“Whoever forms the next Government must set in stone as a matter of urgency a bold industrial strategy that will help cement the foundations for long-term growth for industry.”

Tom Lawton, a partner at accountancy firm BDO, which carried out the survey in conjunction with EEF, said Brexit was affecting the long-term outlook for UK manufacturing.

He said: “Brexit does create uncertainty and it is important that the new government is clear that Brexit will be structured in a way that serves the best interests of business.

“As part of this it is vital that we remain open for business and negotiate new trade agreements with the EU and other key markets so that international markets remain open and accessible as soon as Brexit is completed.”