EEF/AIG Survey – Brexit fears stalk manufacturers as clock enters final countdown
UK manufacturers are much less confident than a year ago, especially about prospects for the UK economy, despite expecting to see growth in orders and employment in the coming year, according to The EEF/AIG Annual Senior Executive Survey...
· Brexit is the biggest source of uncertainty for 72% companies – exchange rate volatility, customs checks and relocation of major customers away from UK biggest Brexit related risks. Companies are responding by stockpiling and reviewing supply chains.
· 58% of manufacturers are concerned about the risk of late payments or extended payment terms and 51% about the risk of bad debt.
· However, only 37% have trade credit insurance in place already with a further 15% planning to take action.
· Cyber security is the biggest non-Brexit related risk – cited by 63% of manufacturers. Companies are responding – 60% already increasing protection with a further 26% planning to do so.
· Overall, half of UK companies see more risks than opportunities with Brexit, the impact of protectionism and the global economic slowdown creating a cocktail of risks for 2019.
· While the overall outlook remains positive, it has weakened noticeably. A balance of just over 6% of companies more optimistic about global conditions, down from over one quarter last year.
Simon Gallimore, Manufacturing Industry Group Lead at AIG UK, said:
“It’s promising to see that UK manufacturers remain optimistic about the prospects for the global economy, despite the challenges of Brexit and other trade tensions expected in 2019, and the potential for a squeeze on cash flow. Strong credit-management bolstered with trade credit insurance can provide some protection for manufacturers’ revenues, whilst supporting their efforts to expand successfully into new markets.
“Aside from the increasing fears related to the uncertain economic environment in the UK, this year’s survey shows that disruption from cyber attacks remains the most significant risk faced by manufacturers. As technology and data continue to play increasingly critical roles in the industry, companies will inevitably find themselves more vulnerable to cyber breaches, which can cause severe disruption to the supply chain.
“Manufacturing is key to the UK’s performance on the world stage, and plays an important part in improving the health of the economy. Minimising disruption to the industry and protecting revenues will be of paramount importance in the coming year. Insurance is one way to help provide reassurance for businesses.”
The full press release from EEF is attached.
A PDF of the survey is available to download: https://www.eef.org.uk/resources-and-knowledge/research-and-intelligence/industry-reports/executive-survey-2019