Manufacturing business optimism is on the rise

The Confederation of British Industry (CBI) recently published its quarterly UK manufacturing optimism statistics, and the results were encouraging.

After surveying 300 manufacturing firms, the CBI reported that business optimism for Q1 2020 was +23, which is an impressive increase from the -44 in the previous quarter. With business optimism improving at its fastest pace since 2014, and well above the expected -28, it will hopefully encourage businesses to invest more into the sector. You can learn more about the key findings by visiting the CBI website here.

Although the findings indicate that there are still concerns regarding shortage of labour and a steady decline in output volumes, it is suggested that the increase is due to improvements in export sentiment and investment intentions, coupled with a record proportion of firms that are expected to authorise capital expenditure in order to expand capacity.

With the temporary increase to the Annual Investment Allowance (AIA) currently set to revert back to £200,000 on 31 December 2020, the timing of any capital expenditure should be carefully planned to ensure AIA is maximised, especially for businesses with a year end that straddles 1 January 2019.

It’s encouraging to see optimism, at last, returning to the sector. With the tax year fast approaching and the end to the additional AIA drawing near, it is important to seek advice about the timing and extent of capital expenditure. Our specialist team have assisted a number of clients make the most of the temporary increase, whilst increasing their capacity and efficiency in the process and would encourage engineering and manufacturing businesses to consider utilising the increase before it’s too late.

For more information on how your business can take advantage of the temporary AIA limit before it runs out, please contact our EQ Engineering & Manufacturing team on engineering@eqaccountants.co.uk or contact our Glenrothes office on 01592 630055.