24 Jul 2024


UK manufacturers predict rapid recovery after vaccine rolls out

Richard Austin, BDO’s new UK head of manufacturing

The vast majority of UK manufacturers (95%) expect their businesses to recover fully from the effects of the Coviod-19 pandemic within a year of a vaccine becoming available. According to a poll of 111 mid-market manufacturers, conducted by the accountancy and business advisory firm BDO, the remaining 5% expect recovery to take 1-3 years.

Almost half (47%) of the companies surveyed said that news of the vaccine would prompt them to change their business plans, although they hadn’t made any significant changes to date. More than half (53%) also reported feeling more optimistic about the UK’s economic recovery than they were three months ago.

This new-found optimism also seems to be encouraging manufacturers to invest. Investing in new technology to increase efficiency was the top priority for the survey respondents, with 39% saying they planned efficiency investments within the next six months.

Despite the optimism around a potential vaccine, many manufacturers are also conscious of the challenges that lie ahead. The businesses surveyed regard paying back business loans as the biggest threat facing them, and was cited by 19% of them. This was followed by fears of further lockdowns (17%) and market contraction (15%).

While the impact of Brexit also looms large, three quarters of the manufacturers quizzed said they had a strategy in place to cope with the transition.

“The news that vaccine trials have proved effective has given a much-needed boost to the manufacturing sector,” says Tom Lawton, BDO’s retiring head of manufacturing. “While this is obviously welcome news, we’re not out of the woods yet. The sad reality is that things are likely to get worse before they get better.

“The transition into the new trading arrangements with the EU at the end of this year, and the ending of the furlough scheme in the early part of next year will both prove challenging and will test the resilience of many manufacturers,” Lawton adds. “The sobering comments made by the Chancellor in the recent spending review also indicate the general economic challenges to be faced by UK manufacturing over at least the short-to-medium term.

“That said, it is very encouraging to see so many manufacturers looking to the future and investing in new technology to improve productivity and competitiveness. This will be vital for long term sustainability and growth.”

• Richard Austin has been appointed BDO’s new national head of manufacturing, succeeding Tom Lawton who is retiring after 13 years in the role. Austin was previously BDO’s head of corporate advisory services and has more than 25 years’ experience in helping businesses to improve their operational performance, both in the UK and internationally. In his new role, he will be responsible for driving BDO’s manufacturing sector strategy.

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