Because of this, the EEF, the manufacturers’ organisation which represents more than 6,000 companies, has reduced its growth forecasts for 2012 to 0.9%, a drop from the 2.2% it predicted three months ago in its last update. That’s bound to make the government nervous, which has said exports are a key path to growth. It’s also disappointing because manufacturing was one industry which recovered relatively well after the recession ended in late 2009.
The EEF said manufacturing started faltering earlier this year, as the sovereign debt crisis in the eurozone went full throttle. Just 12% of companies reported that output had increased in the three months to November. This compares to 27% in the previous three months. ‘The signs of caution that had been emerging through the second half of this year have clearly become more entrenched as global growth concerns have escalated’, Lee Hopley, the EEF’s chief economist, said.
The nervousness in the eurozone has led to a slowdown in orders for UK manufacturers, the majority of whose exports go the EU. The latest trade figures from the Office for National Statistics show that around 60% of UK exports go to the region. Unsurprisingly, this has intensified calls for manufacturers to export more to emerging economies.
Steve Plumridge, who owns Kent-based scientific instrument company Cantium Scientific, is one business owner feeling the pressure: ‘About a third of our sales normally come from Europe, but in the last year that’s dropped to about a sixth of our income’, he says. ‘We’ve made up the difference by increasing sales to the Far East; in particular Singapore, Taiwan and Malaysia’.
Even so, he remains cautious: ‘When Europe calms down, who knows what will happen to the other regions. We’ll keep our focus global’.