UK factories ‘making hay while the sun shines’

The country’s factories are reporting bumper order books – bolstered by the weak pound in the wake of the Brexit vote and stronger eurozone economy.

A closely watched survey of firms’ expectations for the third quarter of the year showed output rising for 34 per cent of the companies questioned by business advisory firm BDO and EEF, the manufacturers’ body, reports Sky News.

It represented a rise from 26 per cent in the previous three months.

According to the report, order books also nudged record levels thanks to higher levels of demand from abroad.

It said 47 per cent of companies saw exports to the EU grow for the third quarter compared with last year, while demand from the US and Asia was also helping offset Brexit-related weakness in the UK.

While the collapse in the value of the pound since the EU referendum has raised import costs – increasing many prices in the economy – it has also made UK goods more competitive abroad.

It has taken time for exporters to feel the benefits, and the report said demand has been fuelled further by the pick up in economic growth in the eurozone which has lagged the UK’s performance since the financial crisis until this year.

The EEF’s chief economist, Lee Hopley, said manufacturing firms were “making hay while the sun shines” but feared it may not last as the survey revealed a further dip in confidence about the domestic economy.

She said: “There is little doubt that Brexit is likely to weigh on sentiment over the next 12 months with uncertainty over the UK’s terms of exit.

“As such, it is vital the Government sends a signal to industry and investors in the UK and overseas that it is doing everything in its power to get growth of the UK economy back on the agenda.

“This must include a bold and ambitious cross-government industrial strategy.”

Tom Lawton, partner and head of manufacturing at BDO, added: “With growing opportunities around the world, particularly the eurozone, manufacturers need stability and certainty in Government policy, including Brexit, to provide the right environment for them to commit to the significant capital and research investment required to support continued growth.”