A balance of just over 6% of companies are more optimistic about global conditions, down from over 25% last year, according to the latest EEF/AIG Annual Senior Executive Survey.

This shows that, while companies still expect to see growth in domestic and export orders, as well as employment, in the coming year, they are much less confident than a year ago, especially about prospects for the UK economy.

Speaking for EEF, the manufacturers’ organisation, its Chief Executive Stephen Phipson said: “While companies are naturally optimistic by their very nature, the spectre of Brexit is now very front of mind for manufacturers. This is bringing with it a whole host of risks from increased exchange rate volatility to rising input costs which right now are very difficult to plan for.”

What he described as a cocktail of protectionism, together with the looming global slowdown between China and the USA, is producing a more pessimistic outlook for growth prospects in the coming year.

According to the survey, companies are still in the main positive about the prospects for the global economy, but the number who take this view is down sharply from last year with half seeing more risks than opportunity compared to a quarter who see more opportunities.

Almost three-quarters of manufacturers (72%) say that Brexit, and the consequences surrounding it, is their biggest source of uncertainty. In this context, 81% of companies identified exchange rate volatility as a risk to their business plan.

The survey also shows that delays at customs was seen as a risk by 76% of companies, highlighting, Mr Phipson said, the critical need to pursue a Brexit that brings frictionless trade.

He also pointed out that business watched “the pre-Christmas pantomime in Parliament” with dismay and called on MPs to back the Prime Minister’s Brexit deal so that manufacturers could have some clarity and certainty on moving to a transition period.

Last reviewed 11 January 2019