Are SME manufacturers entitled to be optimistic about short-term future?

SME manufacturers have endured a tough time recently, but even those who have been hit hardest by the global financial crisis appear to be optimistic about the prospects of future growth.

SME manufacturers saw orders and output continue on a generally downward curve in the first quarter of this year, with falls in both domestic and export demand driving the poor results and many companies pondering major restructuring throughout their business. However, these figures appear to have done little to dampen the spirits of SMEs across the UK, who seem to be confident that the tide will shortly turn.

Stephen Gifford, director of economics for CBI, captures the general mood among SMEs everywhere regarding the current climate:

“It’s been another disappointing quarter for small and medium-sized manufacturing firms, who have seen new orders and output continue to fall.

“Nonetheless, firms do expect to raise output a little in the coming three months. The recent weakening in Sterling will have boosted the competitiveness of the UK’s smaller manufacturing firms, with a strong pick-up in the export orders predicted.”

But is this optimism well founded? Can SME manufacturers expect things to improve at all over the rest of this year and going forward?

Taxing affairs

Outside investment is always a huge issue for the manufacturing industry in the UK. If those within the sector are hoping for things to improve then one major stumbling block could be the debate which is currently raging over corporate tax avoidance.

There is a growing fear among the manufacturing sector that foreign-owned companies (many of whom are responsible for a large percentage of the regular investment in UK manufacturing) may be put off the idea of investing if UK tax laws are re-structured to appease a restless public.

Numerous reports have emerged in the last few months of major corporations who are making use of tax loopholes in order to save money. If this incentive is removed, there is a worry that major investors in the UK manufacturing sector will look elsewhere for opportunities, ultimately having a major impact on the industry.

Seeking advice from a company insolvency specialist could make a crucial difference for UK manufacturing companies that are beginning to fail in the current climate.

If their current optimism is misplaced then it could be an anxious time for the sector as a whole.

If you would like to have a free no obligation chat with one of our advisers please call us on 0207 186 1143.

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