Firms put investment on hold over Brexit fears
EU no-deal could be the ‘final nail in coffin’ for businesses
CORONAVIRUS combined with worries about a no deal Brexit mean East Midlands manufacturers are still holding back on investments, according to an industry survey.
The report, by Make UK and business advisory firm BDO, suggested companies have continued to hold back spending over the past three months – though not at quite the extent they did during peak lockdown.
It also indicates local feeling is not as bad as the average for the UK, although the continued impact on future investment is likely to hamper companies when it comes to their recovery.
Make UK said given the very real” possibility of no deal, investments could suffer for the rest of the year.
The survey results indicated company order books and output in the East Midlands both took a hit over the last quarter.
The proportion of companies intending to take on staff has also fallen sharply.
Make UK, which represents 20,000 companies of all sizes, now forecasts manufacturing output will fall almost 11 per cent this year while it has downgraded its forecast for recovery in 2021. It said GDP is forecast to fall by 8.5 per cent this year before recovering by 10.1 per cent in 2021.
Charlotte Horobin, region director for Make UK in the Midlands said: “Manufacturing has begun to climb away from the abyss it stared into earlier in the year.
“But, make no mistake, it is going to be a long haul back towards normal trading, with talk of a V-shaped recovery nothing more than fanciful.
“Having emerged from three years of political uncertainty at the end of last year, increasing talk of a final no deal exit from the EU would be a final nail in the coffin for many companies.
“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 the first step towards a fuller recovery is provided by a comprehensive trade agreement with the EU.”
Jon Gilpin, head of manufacturing at BDO in the Midlands, said: “The fact 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 – increasingly likely, 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, but failing to invest now will have serious medium to long-term implications,” Mr Gilpin added.
“The government must be alive to this risk and provide support.”
It is essential the first step towards a fuller recovery is provided by a comprehensive trade agreement with the EU.
Charlotte Horobin