Manufacturers are set to unveil more gloom as their champions warn the Chancellor that the UK could be left in the industrial slow lane by cuts in support for innovation and exports.
The latest snapshot of the sector – accounting for 10 per cent of the overall economy – from the EEF manufacturers’ organisation is set to show virtually all indicators in poor health during the final quarter of 2015.
The findings are the latest blow to George Osborne’s ambitions for a “march of the makers”, rebalancing the economy away from services.
The EEF, in a submission to the Chancellor ahead of his Spending Review next week, warns that the sector’s fragility means that the “important job of balancing the books must not be allowed to derail industry’s long-term prospects by creating uncertainty or adding to the cost burden for globally exposed manufacturers”.
Official figures show manufacturers in recession since the beginning of this year.
The body cautions against any reduction in government support for some of the nation’s most advanced industries. “To do so would send out the wrong message to companies who are responsible for more than two thirds of the UK’s research and development activity and almost half of exports,” it says.
Instead the EEF wants to see increased backing for Innovate UK, the body which supports business research and hi-tech development. Out of its £600m annual budget, £72m is earmarked for high-value manufacturing. R&D tax credit claims, meanwhile, totalled £1.75bn in 2013-14, of which the manufacturing sector received 37 per cent.
The EEF is urging the Chancellor to ensure that UKTI, the export support agency, receives adequate funding.
The EEF’s chief executive, Terry Scuoler, said: “The Chancellor has a lot of boxes to tick in his autumn round-up of announcements, from reducing the deficit and supporting stronger productivity growth to delivering more efficient government and quality public services. Manufacturers stand behind these goals, but a much more challenging growth outlook since the summer means the Chancellor’s statement must also deliver a stable and supportive business environment for our vital industries.”
