The biggest manufacturers in Britain are confident that the country is becoming more competitive as a worldwide center for manufacturing, even though challenges such as expensive energy, lack of workers, and political uncertainty are hindering advancement.
During a crucial time for the economy leading up to the general election, Make UK, a trade organization for manufacturing, and PricewaterhouseCoopers, an accountancy firm, reported that industry leaders were becoming more optimistic about the sector’s future. However, they also acknowledged that there were still persistent economic obstacles to overcome.
According to Make UK, a survey of over 200 senior manufacturing executives revealed that the majority believe Britain is becoming a more competitive location for industrial production compared to a year ago.
Approximately 33% stated that the UK was improving its competitiveness in comparison to Germany and France, while over 25% believed that Britain was surpassing Spain and Italy. Nevertheless, a greater proportion of businesses reported that the UK was falling behind the US, China, and India.
The results were revealed following a time of increased uncertainty due to the Covid pandemic, Brexit, and the impact of rising energy costs following Russia’s invasion of Ukraine. Industry leaders are optimistic that 2024 will be more stable as inflation decreases and there is potential for interest rate cuts by the Bank of England.
Stephen Phipson, the CEO of Make UK, stated that there is a glimmer of hope for improved conditions due to a more favorable and consistent policy environment. However, this progress must be solidified through a lasting industrial strategy.
The UK’s manufacturing output has been declining for 17 months in a row due to increased borrowing costs and decreased consumer demand. In comparison, other EU countries such as Germany, where the economy is in recession, have experienced even steeper declines in activity.
UK firms had welcomed measures in Jeremy Hunt’s autumn statement to offer permanent investment reliefs, saying the tax breaks could encourage investment in Britain. However, bosses have also roundly criticised ministers for the lack of an industrial strategy after years of flip-flopping on policy – including Rishi Sunak watering down the UK’s net zero promises last year.
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According to a recent survey by the British Chambers of Commerce, Brexit is negatively impacting the competitiveness of the British economy. Out of over 700 UK exporters surveyed, nearly two-thirds reported difficulties in selling to the EU, which is the largest export market for the country.
The Make UK report revealed that the UK’s top companies’ CFOs are experiencing increased optimism, according to a separate study conducted by Deloitte.
of firms reported they were cutting investment
Based on the most recent quarterly survey of chief financial officers, which is closely monitored by the Bank of England to identify potential early indicators of economic changes, approximately 11% more companies stated that they were reducing their investments.
Finance executives were feeling more positive about the outlook for their company compared to three months ago, which was notably higher than usual.
According to Ian Stewart, the chief economist at Deloitte, these results may appear to contradict recent economic updates, such as a decrease in third-quarter GDP and predictions of slow growth in the UK in 2024.
However, although the rate of expansion decreased in 2023, the economy remained stronger than anticipated with low unemployment rates, stable corporate profits, and no signs of financial market strain. Most importantly, inflation has significantly declined since the summer, leading to predictions of earlier decreases in interest rates.
Source: theguardian.com
