According to a survey from Make UK and BDO, the continued strains being felt across the automotive and aerospace industries have hit the region
Manufacturing body Make UK has become the latest body to call on the Government to support companies seeing huge reductions in exports due to the post-Brexit trade deal with the EU.
The organisation said manufacturers across the North East have begun 2021 with a mixed picture as some sectors struggle and the coronavirus crisis continues to adversely affect business UK-wide.
According to a survey from Make UK and business advisory firm BDO, the continued strains being felt across the automotive and aerospace industries have hit the region.
The review looking at the first quarter also shows the brutal impact of the pandemic with the sector overall seeing a drop in output of 10% nationally last year.
But, Make UK has upgraded its growth forecasts for the sector to 3.9%, up from 2.7% at the end of 2020 amid a more optimistic outlook expected for the year ahead.
The new survey said manufacturers suffered a “seismic shock” last year, but despite a “more positive road ahead”, a major worry remains around the UK’s relationship with the EU, which the survey describes as more than “teething troubles.”
The organisation’s words are similar to comments made by the North East England Chamber of Commerce at the end of last week after official figures showed the largest drop in exports since records began, with particular reduction in trade with Europe.
June Smith, region director for Make UK in the North, said: After the seismic shock to the sector last year, manufacturers in the North East are seeing a more positive road to recovery this year. The major cloud on the horizon, however, remains the transition to new trading arrangements with the EU which go beyond teething troubles.
Ms Smith said the Government must recognise this and work with industry and the EU to smooth these problems out, or they will become structural and permanent. This could have long-term consequences for exporters who could lose business, and importers who could choose to give up on the UK market.
The Make UK said output in the North East improved significantly from the end of last year on the back of substantially improved UK and export orders.
But the difficult business conditions through most of 2020 meant job numbers remained negative, as have investment intentions.
Steve Talbot, head of manufacturing at BDO in the North East, said: Many will have deferred tax payments and taken on additional loans to help them through the crisis.
He said that the recently announced extension of the furlough scheme and other support measures will help in the short term, however, many will need to use this time to plan and implement turnaround strategies – and in certain cases take some tough decisions.