‘Long haul back’ for east’s manufacturers as investment slashed

The East of England's strong food and drink sector has stopped the region faring as badly as some pa

The East of England's strong food and drink sector has stopped the region faring as badly as some parts of the UK on the manufacturing front Picture: 2 SISTERS FOOD GROUP - Credit: Archant

A ‘no-deal’ Brexit would be “the final nail in the coffin” for many manufacturers in the East of England already struggling to recover from the coronavirus pandemic, the sector has warned.

The region’s manufacturing base could be hit by the uncertainty of a no-deal Brexit as well as the fallout from the virus crisis, Make UK says.

A Make UK/BDO Manufacturing Outlook Quarter 3 survey many of the region’s companies were cutting back on investment, with a -20% balance on investment intentions suggesting they will not be in a position to take advantage of any recovery.

MORE – John Lewis staff miss out on bonus as store closures announcedThe pandemic has taken a heavy toll on company order books and output in the East of England with the balances for orders and output falling to -23% and -9% respectively, the survey found. Recruitment has also taken a heavy blow, it found, with the numbers taking on new staff falling sharply.

However, the region’s output levels are still “significantly better” than the UK average, Make UK said, possibly reflecting its strong food and drink sector.

Make UK regional director for the East of England Charlotte Horobin said manufacturing had begun to climb away from the abyss that it stared into earlier in the year.

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“But, make no mistake it is going to be a long haul back towards normal trading conditions, with talk of a V shaped recovery nothing more than fanciful,” she said.

“Having emerged from three years of political uncertainty at the end of last year, increasing talk of a final ‘no deal’ exit from the European Union (EU) would be a final nail in the coffin for many companies.

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“If we are to avoid this and, the avalanche of job losses that would follow in already hard hit areas and sectors, it is essential that the first step towards a fuller recovery is provided by a comprehensive trade agreement with the EU.”

Keith Ferguson, head of manufacturing in East Anglia at accountancy firm BDO said: “The fact that so many businesses across the region are losing their appetite to invest is a real cause for concern.

“With a no deal exit from the EU - and associated logistics, customs and cost implications - looking increasingly likely, British manufacturers will need to step up a gear in order to compete internationally, and this will require significant investment in productivity and digitalisation improvements.

“No-one is in any doubt about the financial challenges facing manufacturers, but failing to invest now will have serious medium to long term implications.

“The government must be alive to this risk and provide the support required to help UK manufacturers through this transition period and beyond. Other countries - perhaps in particular Germany - do provide good examples of consistent long term support to their manufacturing sectors. The UK should look to adopt a similar approach.”

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