THE PROOF OF THE PUDDING…

Although the recent Autumn statement was delivered against a short-term backdrop of continuing turmoil in the Eurozone, the Manufacturing Technologies Association’s (MTA) economic forecast, prepared by Oxford Economics, for the UK economy suggest there are clear signs of solidity in manufacturing and advanced engineering.

However, as highlighted by the MTA, bearing in mind the strength of the rhetoric the Government has used in promoting manufacturing over the last year or so, there was surprisingly little in the package that aimed directly at support for the sector. As MTA’s Paul O’Donnell highlighted this in itself is not necessarily a cause for concern, as industry specific measures are more properly the business of the Business Department not the Treasury – but it was disappointing they saw fit to reject the urgings of all the major manufacturing bodies, including EEF and EAMA as well as the MTA, to improve the Capital Allowances regime for everyone as well as just those firms lucky enough to be located in one of the eight Enterprise Zones.

O’Donnell also explains the manufacturing focussed measures that were announced were to protect the position of particularly energy intensive companies largely in the metals and plastics industries and to introduce financial recognition for R&D ‘above the line’ ie payable in means other than the current Tax Credit.

The most promising news for many manufacturing SMEs was that the Government has been convinced by what organisations such as the MTA have been saying for some time now, that the availability and affordability of credit remains a big issue. A £20bn programme of so called credit easing, effectively a loan guarantee scheme, promises to bring some relief. O’Donnell says the details are still unclear but it seems the Government will underwrite a portion of the risk that Banks take on when lending to SMEs, hence making them more likely to lend, and making it cheaper for firms taking on debt. A rough estimate is that it could cut 1% of the prices of a loan.

This is certainly a positive development, but as O’Donnell concludes, the real proof of this particular pudding will surely be if banks appetite for lending to manufacturing SMEs increases.

On behalf of the Plant and Works Engineering team I would like to wish all readers and advertisers a very happy Christmas and a peaceful and prosperous 2012.