UK manufacturing struggles despite strong economy
that despite the UK manufacturing sector had its strongest
quarterly exports results for eight years at the end of 2004,
businesses are still not making the most of the current
opportunities.
The BCC said it was concerned that, despite the relatively positive economic environment in the UK, manufacturing output dropped by 0.5 per cent in the final quarter ending in November, which was unequally balanced by a continuing rise in employment in the sector.
BCC spokesman David Frost said, "Despite some positive news for the export sector, there are worrying signs for manufacturing. The home sales balance weakened, both employment balances fell, and the investment in plant and machinery balance declined. These results reinforce our concern over the sector's persistent inability to sustain recovery."
"On the positive side, manufacturing export balances and cashflow strengthened. There was a welcome improvement in confidence balances, but this only reverses the large falls in quarters 2 and 3. Overall, the Q4 manufacturing results are just adequate, and the sector continues to face serious challenges and threats."
The mixed news from the BCC was further dampened by predictions of a slight downturn in economic growth for the UK during the course of the next two years. Currently GDP is expected to slow from 3 per cent to 2.5 per cent in the course of 2005 and 2006.
The BCC says this provides more reason for concern, especially considering the sector has not been performed well during a period when economic growth has been strong. The organisation beleives that manufacturers will have to become even more resourceful if they are able to make the most of a more competitive economic environment.
However, despite the downbeat message, economists say that the results there are underlying signs that the manufacturing sector in the UK is more resilient than it might seem. Howard Archer told the Guardian that the BCC's survey points to a more resilient manufacturing than it first appears, particularly in view of the fact that interest rates are predicted to remain stable.
With an estimated 7,220 food and drink enterprises in the UK, the industry currently has a £69.4 billion turnover, accounting for 15.5 per cent of the total manufacturing sector. It also employs around half a million people, accounting for 13.7 per cent of the total manufacturing workforce.
