UK manufacturers are predicting a sharp recovery in their fortunes once COVID-19 vaccines roll out, according to new data published by accounting and business advisory firm BDO.
Buoyed by news of vaccine trial successes, 95% of manufacturers surveyed by BDO predicted that their business would fully recover within a year of a vaccine for COVID-19 being made available. The remaining 5% said that the recovery would take between 1-3 years.
BDO’s Rethinking the Economy poll of 111 mid-market manufacturers also found that almost half (47%) said news of the vaccine would prompt them to change their business plans although they hadn’t made any significant changes to date.
Over half of manufacturers (53%) also reported feeling more optimistic about the UK’s economic recovery now compared with three months ago.
This new-found optimism also seems to have encouraged manufacturers to invest for the future. Investing in new technology to increase business efficiency was considered to be the top priority by survey respondents, with almost two fifths of manufacturers (39%) saying they planned efficiency investments within the next six months.
Despite the optimism around a potential vaccine, many manufacturers are also conscious of the challenges that lie ahead in 2021. Paying back business loans was judged to be the biggest threat facing businesses by 19% of respondents. This was followed by fears over the prospect of further lockdown (17%) and general market contraction (15%). An overwhelming majority (93%) also expressed fears that the tiered lockdown system risked widening the regional economic divide.
While the impact of Brexit also looms large, three quarters of respondents said they had a Brexit strategy in place to cope with the transition.
Commenting on the findings, Tom Lawton, BDO’s National Head of Manufacturing, said: “The news that vaccine trials have proved effective has given a much needed boost to the manufacturing sector.
“While this is obviously welcome news, we’re not out of the woods yet. The sad reality is that things are likely to get worse before they get better. The transition into the new trading arrangements with the EU at the end of this year, and the ending of the furlough scheme in the early part of next year will both prove challenging and will test the resilience of many manufacturers. The sobering comments made by the Chancellor in the recent spending review also indicate the general economic challenges to be faced by UK manufacturing over at least the short to medium term.
“That said, it is very encouraging to see so many manufacturers looking to the future and investing in new technology to improve productivity and competitiveness. This will be vital for long term sustainability and growth.”