Engineers warn on the future of UK manufacturing

If the UK`s manufacturing growth remains at the same level that it was during the 1990s - an average of just 0.5% a year - the nation`s trade gap will reach almost £80bn by 2010, the Engineering Employers Federation has warned. A persistent deficit of this size would leave the UK dangerously exposed to fluctuations in investment income and dependent on its ability to attract capital inflows, the EEF suggests.

In a new report*, the EEF highlights the contribution that manufacturing still makes to the British economy and sets out a long-term agenda for the sector to survive and prosper.

"Manufacturing now stands at a crossroads and is being subjected to massive change," says EEF director-general Martin Temple. "By the end of this decade, it will look significantly different than it does today. We cannot allow it to decline at its current rate or the UK economy overall will suffer the consequences."

Manufacturing`s contribution to the UK trade balance has deteriorated from a surplus of £1.3bn in 1980 to a deficit of £29bn last year. As manufacturing capacity has moved abroad, the import of components has risen by an annual average of 20% since 1997.

The EEF argues that a 5% fall in manufacturing exports would require an expansion in the services sector of almost three times as large to maintain the trade deficit at its present level.

*Manufacturing at the crossroads - neglect or nurture. The report can be downloaded from the EEF`s Web site at www.eef.org.uk.