Optimism in the British manufacturing industry rose at its fastest rate since 1973 for the first three months of 2014, a study conducted by the Confederation of British Industry (CBI) has found. Of the 405 businesses asked, 41 percent felt more positive about production prospects than three months ago. This is while only 8 percent said they felt less positive about the future.
Many business owners reported an increase in the total number of orders received, along with output volume, which is currently at its highest level since the mid-1990s. This has led to business bosses wishing to increase investments throughout 2014, as the chief policy director of CBI, Katja Hall asserted: "There are still bumps in the road ahead, with only a tepid recovery likely in the euro zone, the pound creeping higher and a rapidly evolving situation in Ukraine. However, expectations for growth in the coming three months are positive and manufacturers plan to significantly ramp up investment in the year ahead."
This is positive for Chancellor of the Exchequer George Osborne, who was criticised by the International Monetary Fund (IMF) in 2013 for implementing policies thought to impede Britain's economic growth. However, recent figures suggest something is indeed going right, at least for the time being. Coupled with the fact that 2014 saw its lowest unemployment rate in five years, these figures could further boost investors' confidence. The IMF chief economist Olivier Blanchard said of the findings: "It is fair to say our forecast was too pessimistic, and indeed growth has been much stronger than we had forecast."
There are some, however, who worry that this positivity will not last for much longer, due to national and international risks that could hamper the British economic recovery. Many, for instance, point to the fact that unemployment levels are deceptive. For instance, some British employees find themselves on zero-hour contracts, and are usually unable to earn the amount of money which would be required to continue the orders boom.
The crisis in Ukraine, moreover, could make investors extremely nervous in the EU as a whole, while a Scottish 'yes' vote to independence in September, could negatively affect British businesses. Scottish independence could see a lowered British credit rating, and may also obstruct business progression, as well as scaring off potential investors. Therefore, continued manufacturer optimism heavily depends on the future decisions made within the UK and EU in the next few months.