Since the British economy first started its long road to recovery in the second half of last year, there has been one sector that has consistently been at the forefront of growth and expansion – manufacturing.
Along with services, the manufacturing industry has helped to push the economy into a position where it is now set to grow by as much as 2.8 per cent in the coming year.
But now, with the Budget announcement from the government for 2014 almost upon us, how will things change for the manufacturing sector? Chancellor George Osborne has pledged to put the growth of the economy and spending ahead of "green crap" moving forward, which could be a good sign for manufacturing.
For one, he has said that he intends to freeze the carbon price floor, a tax which could remain at a steady rate for the next four years. This will come as a boost given the fact the levy has often been blamed by the Confederation of British Industry, among others, for restricting the ability of some companies to compete and expand.
It is thought that energy costs total ten per cent of all outlay for firms in the manufacturing sector, so making sure that this can be addressed should be a priority, business leaders have said.
Another issue that the sector itself wants addressed on March 19th is that of a skills gap. While the industry is always trying to expand and bring in new members of staff at the moment, companies often find that they are faced with a lack of requisite skills.
This could see the chancellor help manufacturing companies by introducing a wave of new skills training schemes across the nation. And it couldn't come at a better time – a survey recently published by BDO said a positive balance of 31 per cent of companies want to hire more people in the next three months.
It is the most positive sentiment towards hiring in the sector for more than a decade, showing the impact that training schemes announced in the budget could potentially have,
So why is it so crucial for Mr Osborne to get it right? The answer is simple – manufacturing is on an upward trajectory, and it's important to keep it on this course.
In January, manufacturing output was up by as much as 0.4 per cent when compared to December, according to the latest statistics unveiled by the Office for National Statistics. And this is a trend that has continued through much of the first part of this year.
In February, EEF said that strong sales and exports were helping to boost the sector, with the latest Markit/CIPS Purchasing Managers Index adding that February was far better than had been expected for the sector as it expanded at its fastest rate since May 2011. The index currently sits at a reading of 56.9, rising from the 56.6 seen in January and far higher than the 56.5 expected in the month.
And looking forward, this is a trend that is expected to continue, with the latest EEF and BDO report stating that business outlook for the first quarter overall is at its highest on record. This shows how important it is for the chancellor to get it right and keep the manufacturing sector headed in the right direction.