Uncertainty hits investment

THE continued political uncertainty over Brexit negotiations is affecting business investment, a new survey shows.

Research by the EEF manufacturers organisation showed that investment has fallen to the lowest level for a year.

A poll of over 300 manufacturers found they remained generally positive, with business confidence holding up looking forward to the second half of the year.

EEF Chief Economist Lee Hopley said: “We continue to see signs of growth across manufacturing and, given weaknesses elsewhere in the UK economy, it is vitally important that we sustain this. However, the durability of this upturn is looking somewhat more fragile as many of the positive forces driving expansion last year such as a resurgent eurozone, a surge in global manufacturing investment and competitive pound are starting to fade.

“New or heightened uncertainties have also come into play, not least what feels like crunch time in the Brexit negotiations which have led to amber lights flashing again on the business investment outlook.

“This matters both for growth now and our longer term productivity prospects.”

Tom Lawton of business advisory firm BDO which helped with the research, said: “Following a record breaking 2017 and a strong start to 2018, we are starting to see the impacts of the ongoing political and economic uncertainty on the UK manufacturing sector.

“However, despite the sector’s slowing performance this quarter, manufacturers – which are the economic engine of the UK economy – still remain cautiously optimistic about the future.”