Britain’s manufacturers have called on the Government to implement a six-point plan to arrest the accelerating downturn in the UK manufacturing sector. EEF, the manufacturers’ organisation, has made the call on the back of its Annual Manufacturing Report which shows that, despite the significant improvement in the sector’s productivity in recent years, manufacturing will contract by 5% in 2009, and is unlikely to expand again until the second half of 2010.

"This year was already going to be challenging for manufacturing, but the combination of the global downturn and continued schlerosis in the financial markets means the downturn will now be longer and deeper than expected,” warns the EEF’s chief economist, Steve Radley (below).

“Whilst reductions in interest rates will kick in at some point, we cannot afford to wait,” he adds. “The unprecedented speed of the downturn since last autumn is hampering companies’ ability to adjust, and Government must put measures in place as a matter of urgency.”

The EEF’s six-point plan calls for:
♦  a comprehensive scheme to guarantee bank lending to businesses of all sizes;
♦  measures to minimise the withdrawal of credit insurance which is threatening the supply-chains at the heart of UK manufacturing;
♦ the Bank of England to take unconventional, yet targeted, measures, such as “quantitive easing”, to increase the supply of money and credit;
♦ more flexible and generous short-time working allowances, and a renewed focus on adult apprenticeships, to help manufacturers hold onto their skilled staff through the downturn;
♦ restoration of empty property relief, freezing of business rates for 12 months, and raising of the Annual Investment Allowance to £250,000, to ease cash-flow problems for manufacturers struggling to re-tool and re-invest; and
♦ a commitment to introduce the proposed Regulatory Budgets which will help prevent the introduction of unnecessary new regulations that would place extra costs on businesses and restrict their ability to manage through the downturn.