UK manufacturers have fears that the economy was heading for a slowdown in 2017 after a survey showed increasing number of factory owners were withholding plans to increase investment.
Following the EU referendum, a sharp rise had been seen in the proportion of executives saying political uncertainty was driving them from spending, according to a poll by the manufacturers' organisation the EEF. According to the poll, a quarter of manufacturers cited this as a reason when asked in the wake of the vote, which increased sharply 6 per cent when the referendum campaign was getting underway in March.
Only days before, the Bank of England warned that the UK economy would slow next year, although it was forced to admit that its earlier fears of a severe near-term slowdown had proved unfounded. It further warned that slower corporate spending and a squeeze on household incomes would hit growth further.
According to the EEF's report, manufacturers were likely to cut back on their investment in plant and machinery in the next two years while responding to growing worries about the prospects for demand as also increased political uncertainty. The survey found that 60 per cent of manufacturers planned to spend the same or less over the next two years, up from 54 per cent in 2015.
According to the EEF's research, those members that planned to increase spending had halved to just 5 per cent as against two years ago, before Brexit.
However, the scenario of a total collapse in investment was overdrawn, with 60 per cent of members saying they would spend the same or less over the next two years. This compared with 51 per cent who had responded similarly two years before.