What to expect for 2015

IN: Business news

A recent survey by EEF and Aldermore shows that there is confidence that the positive business and economic trends of 2014 will continue, although the pace of growth companies are planning for is more modest, while the feeling of optimism is less prevalent than it was this time last year.

undefinedThe 2015 survey shows 37% of manufacturers expecting another year of improvement in the UK economy, with 17% expressing the view that deterioration in the outlook is more likely. Whilst this shows some difference from the 2014 survey, respondents remain more positive on the UK’s economic outlook going into 2015 than in either 2012 or 2013. Overall, seven in ten manufacturers in the survey see the UK as a competitive location for their activities in 2015.

Manufacturers’ views of industry prospects in the year ahead have also moderated compared with a year ago. Over a third of companies forecast an improvement in industry conditions, a decrease from the 62% of respondents predicting growth in 2014. However, there are variations in sentiment emerging from different manufacturing sub-sectors.

At the firm level, responses are once again more optimistic for the domestic demand outlook compared with export sales. An upbeat view remains from a majority of manufacturers on productivity improvements in the year ahead and activity levels should see industry create more jobs. However, standing out this year is the relatively weak picture on profitability.

In contrast to the UK and industry outlook, there is a lack of confidence in global economic prospects. Views on the eurozone fall back into negative territory and back to the level seen at the beginning of 2013, whilst North America and Asia are still seen as bright spots for the year ahead.

Companies are putting in place strategies in response to a patchwork of opportunities, risks and uncertainties. These activities fall into three broad groups – efforts to differentiate, improvements to production processes and supplier relations, and entry into new business areas. Coming out on top are strategies which can enhance manufacturers’ competitive position in the market by bringing new product offerings to their customers and by raising the profile of their capabilities through increased marketing and branding activity.

A range of risks continue to be identified by manufacturers, with several areas seeing an increase in the proportion of respondents compared with last year’s survey figures. Rising input costs remain a concern for the largest proportion of manufacturers. Pressure on pay settlements, exchange rate risk, economic disruptions and cash flow risk all feed into manufacturers’ worries for the year ahead. With the same proportion agreeing that there are more risks than opportunities in the year ahead as disagreeing, there appears to be a fine balance for some companies in 2015.

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