LONDON (Jan. 16, 12:50 p.m. ET) — With the eurozone crisis and concerns about economic recovery in other developed markets continuing, United Kingdom manufacturers are turning to emerging markets to boost sales, according to new research.
A survey of senior executives conducted by EEF Ltd., the U.K.'s manufacturers' organization, found that while nearly half those polled believed the UK economic situation will worsen, more than 80 percent believe their companies' sales will be greater or at least level in 2012, thanks in part to export opportunities.
While the future is viewed with what the EEF calls a “high degree of uncertainty” and the U.K.'s economic outlook remained “challenging”, the organization said there were grounds for optimism for domestic manufacturers.
EEF chief economist Lee Hopely said that most “continue to grasp the opportunities in untapped markets for services and in faster growing emerging markets.
“Together with the diversification of supply chains, these factors are underpinning some confidence at firm level that sales will end 2012 higher,” she added.
The EEF survey found that one of the biggest concerns for manufacturers was the shortage of raw materials – two thirds of those polled – while two fifths said events in Europe and the possible knock-on effect for the UK were seen as a major risk.
Meanwhile an adviser to accountancy firm Ernst & Young (E&Y) said figures for the last quarter of 2011 and the first quarter of 2012 “are likely to show the UK is back in recession.”
Professor Peter Spencer, chief economic adviser to E&Y's ITEM Club, said the U.K. was going to have to wait until this summer before there are any signs of improvement, but there would be no repeat of 2009.
“We are not going to see a serious double dip,” he said. “This time around, U.K. companies have strong balance sheets and have built up large cash stockpiles, which will provide a useful insurance policy if the situation deteriorates further.
“Business spending has already been cut back heavily. However, with business confidence faltering, investment and recruitment are likely to remain on hold until stability returns,” he added.