Business confidence among the UK’s smaller and mid-sized engineering companies is returning, but their growth is being hindered by a lack of trust in the banks, poor access to finance, and skills shortages, according to the latest survey of members of the Engineering Industries Association (EIA).

Member companies report that demand is increasing both in the UK and in export markets, with 39% expecting stronger domestic demand and 45% foreseeing stronger exports. More than 28% of the responding EIA members expect to take on more employees and a third are planning to increase investment in the businesses.
 
The survey results were presented by EIA President Sir Ronald Halstead at a meeting with the Bank of England. “Companies who wish to expand and take advantage of the current exchange rate are still having problems in raising the finances from their Banks,” he said. “This is inhibiting investment in growth and exports.
 
“Banks are looking backward and not forward, their charges are high, they are cutting overdrafts for viable businesses and they are asking for more securitisation of assets for overdrafts or loans,” Sir Ronald continued, adding that the banks lack experience and an understanding of the engineering sector.
 
Many EIA members have turned their back on the banks and are relying on their own resources to finance expansion. “We are totally self-financing having no trust or respect for any lending institutions,” one member told the Association. “Therefore our expansion is limited to what we can actually invest ourselves.”