Monday, 03 October 2022 10:46

Threadbare sector confidence requires urgent government support – MHA comments

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Following the release of the latest UK Manufacturing PMI (3 October), Richard Powell, partner at MHA, see’s little reason for sector optimism as rising inflation and a dramatic downturn of the pound pile further pressure on manufacturer’s margins and their ability to come through economic turbulence unscathed:

“UK manufacturers have been hit hard in September. Despite a small uplift in this month’s PMI Index, dramatic increases in inflation, coupled with the plummeting value of the pound and prohibitive energy prices, have put increasing pressure on business margins and eroded fragile confidence in the sector as the economy heads towards what seems to be an inevitable recession.

2022 10 03 105124“The Chancellor’s mini-budget provided a few reasons for optimism, such as the welcomed extension to the £1 million Annual Investment Allowance and scrapping of planned increase in Corporation Tax. The 6-month energy price cap on the wholesale cost of gas and electricity starting from 1 October will also bring much-needed relief for manufacturers, however the limited time-scale of the scheme will do little to shield businesses from crippling energy costs beyond April 2023.

“While the majority of the sector continues to feel the economic strain, the weakening pound may present a window of opportunity for businesses exporting overseas, particularly to the United States, to benefit commercially and offset broader financial burdens, however the pound’s volatility makes it impossible to plan for the long haul.

“The sector desperately needs the government to introduce immediate measures that will bring short term sector stability, alongside new incentives for greater business investment in areas such as green technology and AI. This must be underpinned by much-needed financial support such as government-support loans, like those seen during the pandemic, to give manufacturers the best chance of coming through coming economic storm intact.”

About MHA

MHA is a network ranked the 12th largest accountancy group in the UK. It comprises of 19 offices nationwide with a strong reputation for specialist industry knowledge and that collaborate and share best practice to provide outstanding client service. The network has 106 partners and 1152 staff across the UK.

MHA is the UK independent member of Baker Tilly International, one of the world’s largest leading international networks of independently owned and managed accountancy and business advisory firms, operating across 148 territories.

Read 241 times Last modified on Monday, 03 October 2022 10:54