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Manufacturing to fuel growth in 2011, says industry body


The Engineering Employers' Federation has forecast that manufacturing in the UK will outperform other sectors and help fuel "better-balanced" economic growth.


The federation — which aims to help the development of manufacturing, engineering and technological companies in the UK — expects the economy to improve by 2.1% this year, but predicts manufacturing to grow by 3.5%.

Although decreases in government spending and the spectre of inflation may undermine manufacturing growth, increases in exports to emerging markets in particular mean that investment and net trade in the sector will make positive contributions to the economy as a whole.

The association’s predictions were released in their report, entitled Economic Prospects 2011.

The federation expects mechanical engineering and the production of metal products to be among top performers because of their links to emerging economies.

According to their calculations, manufacturing grew 3.8% in 2010.

The also expect manufacturing’s growth to continue to outstrip the economy slightly as a whole in 2012, with forecast’s standing at 3% an 2.6% respectively.

The federation’s chief economist, Lee Hopley, said: "Manufacturing now looks set to be at the heart of the rebalanced growth the economy needs with sectors most exposed to international markets likely to post the highest growth.

"But there are continuing risks to growth both here and abroad. To maintain momentum the Government must keep its foot down on policies to accelerate growth. The fact that the UK is now on the road to recovery will not necessarily make the job easier and the forthcoming Budget will offer the first major point in the year when this resolve to clear away obstacles to growth must be demonstrated."

The federation also warned that debt problems in European markets and rises in commodity prices also threaten economic growth.