Fifth of manufacturers fear spending cuts effect

The Engineering Employers Federation (EEF) forecast a 3.5 per cent growth for manufacturing in 2011 compared with 2.1 per cent for the economy as a whole, predicting a better balance for the economy, with investment and trade making positive contributions.

Mechanical engineering and metal products will perform well this year because of expected high demand in export markets, said the EEF.

Chief economist Ms Lee Hopley said: "At the start of 2010, shell-shocked from the worst recession in 80 years, forecasters across the country were wary of predicting anything more than very modest growth, but manufacturing picked up the baton and delivered its best performance in 16 years.

"Manufacturing now looks set to be at the heart of the rebalanced growth the economy needs with sectors most exposed to international markets likely to post the highest growth.

"But there are continuing risks to growth both here and abroad. To maintain momentum the Government must keep its foot down on policies to accelerate growth.

"The fact that the UK is now on the road to recovery will not necessarily make the job easier and the forthcoming Budget will offer the first major point in the year when this resolve to clear away obstacles to growth must be demonstrated."

A survey of over 500 firms by the EEF showed that a fifth expected Government spending cuts to hit orders.