National Recovery Plan needed to boost investment and save jobs

Posted on 15 Jun 2020 by Jonny Williamson

The government is being urged to work with business and other key stakeholders from across the UK on a National Recovery Plan, including an immediate stimulus package, to help boost investment and safeguard jobs.

With its latest UK Manufacturing Outlook showing the lowest balance of output in the 30-year history of the survey, Make UK is calling on the government to implement a National Recovery Plan.

This should begin with an immediate stimulus package beginning with a Business Rates holiday for manufacturers similar to that granted to the retail sector earlier this year.

Make UK believes this would be the single most important measure the Chancellor could introduce, noting that it would have “the quickest impact for companies of all sizes and across all sectors.”

This should be accompanied by other immediate measures, including:

Furthermore, while the furlough scheme appears to have mitigated the worst impact of immediate redundancies, evidence suggests that without government intervention to free up firms to invest again this has merely delayed large-scale redundancies in addition to those already announced in the aerospace and automotive sectors.

UK manufacturers may be facing a severe crisis, but as with all other crises, the sector will find a way to recover, noted Stephen Phipson, chief executive of Make UK.

“Though, there is no disguising the immediate months and perhaps years ahead will be some of the toughest industry has ever faced,” he added.

Key findings from the UK Manufacturing Outlook Q2 survey:

  • Output reached a record low of -56%, while both UK and export orders fell to -52%, comparable to the levels seen during the worst of the financial crisis.
  • Export orders had turned negative last quarter for the first time since 2016 showing that demand in major markets was already slipping, a situation Covid-19 has exacerbated.
  • At -42%, the forward-looking indicator of output for the next three months is the worst predicted in the survey’s history.
  • At -41%, a slight improvement is in store for total orders in the next quarter, but it remains an extremely distressed balance historically.
  • Those closely connected to the automotive, aerospace and construction sectors appear to have been the most badly affected.
  • Overall, just 11.7% of companies said they were operating at full capacity.
  • Investment has fallen in machinery equipment (-70%), electrical equipment (-67%) and electronics (-54%) – all of whom serve as a proxy for investment in new technologies across the wider economy.
  • Employment balance fell to -22%, indicating that many companies are already going ahead with redundancies.
  • Employment balance is forecast to hit -36% in the next three months.