Member of the UK200Group comments that the British manufacturing sector is lagging behind
A member of the UK200Group of independent accountancy and law firms has today commented on news that the British manufacturing sector is lagging behind the country’s service industry.
The comments come after a new British Chamber of Commerce (BCC) survey revealed that the UK is facing a two-tiered growth pattern as the services sector continues to expand, while manufacturing growth slows.
The BCC’s second-quarter economic survey showed that while the services sector saw significant growth and improvement in all areas, virtually all measures of the manufacturing sector declined during the same period.
The survey also identified that employment requirements, business confidence and a desire to invest by manufacturing companies all worsened during the second quarter of 2015.
Jonathan Russell, Partner at UK200Group member firm ReesRussell, said: “There is no doubt that the service industry is forging ahead, while manufacturing is lagging. In fairness, this is not unsurprising as with the concept of ‘just in time’ now so firmly entrenched in the supply chain, there almost needs to be an increased demand for product before ordering/manufacturing follows.
“Services on the other hand often happen earlier in the cycle. The underlying problem though remains that as a consumer society we need the ultimate customer, the public, to be spending and as retailers are constantly telling us, that it is a pretty torrid time at the moment.
“The end customer simply does not have the money to spend and unless there are customers there is no point in producing. In addition, because we have very low inflation there is little sense in manufacturers producing speculatively because the margins now are not sufficient for them to gamble.
“The cry is always that we must export more but the overseas buyers are mostly in a similar situation and with sterling strengthening against the Euro, many overseas customers will look elsewhere in Europe.”