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Political uncertainty ‘holding back’ investment by East of England’s manufacturing sector

PUBLISHED: 09:45 24 October 2017

EEF/Santander has published its latest manufacturing survey. Picture: GETTY IMAGES/VSTOCK RF

EEF/Santander has published its latest manufacturing survey. Picture: GETTY IMAGES/VSTOCK RF

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Political uncertainty around Brexit is adding to other hurdles faced by the East of England’s manufacturers, causing them to hold back on spending on automation technology, according to a business lobby group.

Charlotte Horobin, EEF. Charlotte Horobin, EEF.

A survey carried out by manufacturers’ organisation EEF and Santander has revealed a slowdown in manufacturing investment amid business uncertainties.

Charlotte Horobin, director for EEF in the East of England, said manufacturers have had to navigate a range of demand-related challenges over recent years, which have taken a toll on the sector’s appetite and ability to invest.

“With global demand on the up conditions should be ripe for industry to make new investments in capacity and productivity enhancing technology. But Brexit means the future outlook for investment is not clear cut,” she said.

“Political uncertainty is adding to the hurdles of cost and lack of skills in holding back spending on automation technology. The forthcoming Budget can at least start to address the latter of these challenges, starting with an ambitious industrial strategy that tackles barriers to investment head on and ensures UK manufacturers are equipped to compete for the future.”

The study found that in the past two years manufacturers invested 6.5% of turnover in new plant and machinery, down from 7.5% last year.

However, the majority of manufacturers (51.1%) intend to spend more on plant and machinery over the coming two years - although this remains finely balanced.

For those who intend to spend more, there is a need to replace equipment which is becoming obsolete, as well as take advantage of new opportunities on the back of an improved global outlook.

But for the other half, Brexit uncertainty is holding back investment plans, while there is also little focus on investing to improve process efficiency.

Investment by manufacturers saw a “reality check” in response to the continued political uncertainty, it said. While demand conditions should be spurring on investment, only a third of firms said Brexit has had no impact on their plans.

The EEF has urged the government to boost investment and productivity in its forthcoming Budget statement.

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