Business is booming in Britain's hi-tech manufacturing sector, but concerns over the economic outlook are putting the brakes on investment, according to a survey published today.
More than three-quarters of respondents to GE's six-monthly High Tech Manufacturing Index are either "fairly" or "very" positive about their current business situation, sending the overall confidence measure up to plus 71, from plus 68 in December. But less than a third (30 per cent) of respondents were similarly positive about the wider economy.
While 118 companies said they were at or near full capacity, nearly half (46 per cent) were not investing to boost production, and a quarter said they had no plans to do so.
Some businesses dismissed capacity constraints as a short-term issue. But 45 per cent blamed economic uncertainty. Skills shortages were also cited in some cases.
"UK hi-tech manufacturers are optimistic but it is not surprising they are being cautious about business investment," Mark Elborne, chief executive of GE UK, said. "They see great opportunities in international markets and growth sectors such as green technologies but have to be careful about these decisions because there is a backdrop of general economic uncertainty."
The manufacturers reported some benefits from the current economic climate. Some 36 per cent of the survey's 403 respondents cited low interest rates as good for business.
But there are more difficulties than there are benefits, the survey says. Rising raw material costs – mentioned by 85 per cent – topped the list of troubles. The effects of the royal wedding double bank holiday, the cold snap and the VAT rise are also an issue as is the impact of the political unrest in the Middle East.
Nearly three-quarters expect their performance to improve in the next 12 months, with most potential in export markets. Nearly half expect to take on more staff.