UK manufacturers provide a ‘significant’ contribution to economy

PM calls on British businesses to 'create and innovate; invest and grow'

Carys Matthews 23 November 2010 11:11

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British manufacturing is set to fill the growth gap as the public sector plays a smaller role in the economy, according to a new report.

The research found that the UK’s manufacturing industry was growing at the fastest rate since 1994 and is highly export driven, with exports accounting for more than half the turnover in 40% of companies.

According to EEF, the manufacturers’ organisation and The Royal Bank of Scotland (RBS), who conducted the study, companies with growth strategies centred on innovation and investment have the greatest potential to lead private sector growth and rebalance the UK economy.

David Cameron has called on British manufacturing firms to “create and innovate; invest and grow”. Some 76% of companies state that their growth strategies will be achieved by increasing innovation in the UK, and 69% by increasing capital investment.

Peter Russell, head of manufacturing sector at RBS said: “This report touches on a number of important issues that are shaping the UK’s manufacturing sector – both challenges and opportunities. What is clear is that manufacturing continues to make a significant contribution to the UK economy and is well placed to play an even greater role in a sustained economic recovery.”

The report also reveals that large companies are driving new product development and EEF says in addition to opening up opportunities for smaller firms, it is vital that the government’s growth strategy seeks to break down the barriers to growth for all sizes of companies.

EEF chief executive, Terry Scuoler, said: “Whilst the current attention on young businesses and start-ups is helpful, we must not ignore the wider benefits to the economy that larger companies bring.

“The UK doesn’t just need a handful of larger companies over the next decade; we need hundreds of them with the scale and muscle to tackle our economic challenges. Otherwise we risk placing a speed limit on our growth potential.”

To help break down the barriers to growth, EEF has recommended that manufacturers promote themselves and their sector at every opportunity. They also call for the government to deliver on its commitment to reduce red tape and improve access to finance through greater competition between banks.