Brexit a growing influence on UK firms’ decision to delay investment increases
1 Oct 2018
The UK’s low productivity performance is likely to dip further as British businesses withhold investment due to continued uncertainty over Brexit, warns the EEF.
In its annual Investment Monitor compiled in association with Santander, the manufacturers’ trade association warned the rate of investment by firms would slow overall over the next two years.
Just over one third (34%) of those responding to the report survey say they intend to increase investment in plant and machinery – the lowest percentage in the five year history of the poll – compared to 66% who will not.
Among small business, the percentage who plan to not increase investment is even greater – three quarters, as opposed to two thirds.
[This] puts into sharp focus the widening gap between the investment manufacturers know they need to make to capitalise on growth opportunities and to adopt productivity enhancing technologies
Lee Hopley, chief economist, EEF
The top reason cited for not investing is order book uncertainty (up from 23% last year to 36%). Close behind, however, is political uncertainty, which has leaped from 17% to 30% in 12 months.
EEF chief economist Lee Hopley commented on the findings, saying: “Our latest Investment Monitor puts into sharp focus the widening gap between the investment manufacturers know they need to make to capitalise on growth opportunities and to adopt productivity enhancing technologies and the hurdles they face in getting those decisions over the line.
“The upcoming Budget needs to take some bold steps to support companies in addressing this shortfall until the clouds of uncertainty start to lift.”
The EEF added that a hold on investment has implications for the fourth industrial revolution; almost 40% of companies with a hundred or fewer employees said they would have prioritised investment in plant and machinery.
The EEF business survey covered 232 companies form 1-23 August 2018.
