Manufacturers growing wary of investment in wake of Brexit vote


Research by EEF, the trade body for the UK’s engineering and manufacturing sector, found that those members planning to increase spending has halved to just 5pc compared with two years ago, before Brexit was not on the horizon.

However, worries about a total collapse in investment in the sector in the wake of the referendum appear overdone – 60 per cent of members said they would spend the same or less over the next two years. This compares with 51 per cent who gave the same answer two years before, reports The Telegraph.

Lee Hopley, chief economist at EEF, said: “Fears of an immediate collapse in business investment appear to be unfounded for now.

“UK manufacturers have been investing at a healthy pace in recent years and while that rate of increase wasn’t going to continue forever, keeping up with customer needs and the competition is ensuring that investment stays on track for many.”

The annual survey also revealed that worries about taking on fresh financial burdens has rocketed.

EEF’s data showed that 53 per cent of its members said they would postpone or cancel investment if they cannot fund it internally, compared with virtually none previously.

More than half of manufacturers said they are holding more cash on their balance sheet, up by a fifth compared to two years ago.

The survey, which was conducted with Santander, did identify positives though, according Charles Garfit, the bank’s head of corporate and commercial.

“It is an understandable reaction from manufacturers to scale back on investment, given the uncertainty,” he said.

“However, manufacturers are also seizing the moment as there are emerging opportunities for ramping up export activity and diversifying operations for manufacturers of all sizes.”

The research concluded that the sector is now watching nervously for the next major development, warning that a decision against a major UK investment, or an election being called once Article 50 is imposed, could act as “trigger points”.

Ms Hopley added: “The spike in political risk should not go unnoticed. There is caution amongst businesses, which will inevitably make it more difficult to get big decisions across the line.

“It’s over to the Autumn statement now to press ahead with policies that further enhance the UK business environment.”