Unemployment in the engineering sector is set to soar

Unemployment in the engineering sector is set to soar, new research

The EEF/RSM Robson Rhodes study highlights high domestic
interest rates, economic slowdown in foreign markets and the continuing
weakness of the euro as the catalysts for the deterioration which has led to
the industry’s lowest annual growth rate since 1993.

The Engineering Outlook report shows a dramatic cut
in this year’s growth forecast for the industry, with the electronics and
electrical engineering sectors amongst the worst hit by the economic downturn.

The report raises fears that contractions already being
experienced in manufacturing abroad will have a knock-on effect in the UK,
possibly even pushing the industry into recession with a subsequent effect on

It reveals that cutbacks in investment and employment have
already accelerated with 12,000 jobs being axed across the industry in the
first quarter.

Most severely affected is the motor industry, which, the
study predicts, will have contracted its output by 6.6% by the end of year.

Job losses are expected to be most serious in the South and
Eastern regions of England and in Scotland, with only Northern Ireland and the
North East remaining unaffected by the crisis. 

The report does offer a glimmer of hope for beleaguered
engineers, however, with the decline expected to stabilize by the end of the
year and a return to growth being achieved early next year.

EEF chief economist Stephen Radley criticised the Bank of
England’s stance on the strength of the pound.

He said,  “We believe
that economic weakness remains a greater threat than any temporary rise in
inflation. Further cuts in interest rates are essential if engineering is to
have the best chance of recovery later this year.

“We expect that the next official data will confirm engineering
is almost certainly in recession, with output, orders and margins all heading
downwards’ leading to ‘significant reductions’ in employment.”

The survey was conducted in May and covered 1455 companies.

By Robert De La Poer



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