South East manufacturers forecast economic boost from new government

Manufacturers across Southampton and the wider South East region are powering ahead with a boost to overall economic prospects forecast from a period of greater political stability.

The findings come in the Q3 Manufacturing Outlook survey from lobby group Make UK and business advisory firm BDO, which shows almost six in ten companies believe that the recent change in government will lead to better economic growth overall in the next 12 months.

In contrast, just 6 per cent of companies expect GDP to decline this year as a result of the new government.

According to the survey, business confidence in the South East is continuing to climb, reaching levels last seen at the beginning of the recovery from the pandemic.

The balance on output in the South East was +18 per cent, but is forecast to jump to +58 per cent in the next quarter.

Total orders are following a similar pattern, increasing from +33 per cent to +60 per cent in the next three months.

This boost to growth is resulting in strong recruitment intentions, with companies looking to take on staff to cope with demand (the balance on recruitment increasing from +8 per cent in Q3 to a forecast +59 per cent in the next three months).

Companies in the South East are also investing in line with taking on staff as the balance on investment has risen to +45 per cent.

Make UK is forecasting that manufacturing will grow by 0.5 per cent in 2024. This is a downgrade from 1.2 per cent forecast in the last quarter but is due to ONS revisions on which the forecasts are based.

GDP is forecast to grow 1.1 per cent in 2024 and 1.8 per cent in 2025.

Keri Anne Mruk, region director for Make UK in the South East, said: “This is a very positive set of results which reflects the boost to stability provided by the new government.

“We now need to see this momentum maintained with a new industrial strategy and other measures in the autumn statement to boost growth – in particular, investment in major infrastructure projects which will provide a long-term return for the economy overall.”

Matthew Sewell, head of manufacturing at BDO in Southampton, added: “Manufacturers across Southampton and the wider South East region are hopeful that a period of greater political stability will provide a better economic outlook ahead, and that in turn is boosting business confidence.

“All eyes are on the government’s next steps. We need an industrial strategy that is fit for purpose to ensure that the confidence firms currently have in future economic prospects is not misplaced.”

With the autumn statement and spending review due at the end of October, Make UK is calling on government to keep up momentum by publishing further detail on the long-awaited Industrial Strategy, including the composition and governance of the Industrial Strategy Council.