BRITISH manufacturers will enjoy faster growth than their German counterparts this year from rising demand at home and abroad, according to a report.

Manufacturers are expecting an improved outlook in 2014 on the back of a predicted pick up in investment, export growth to emerging markets and, an improvement in the eurozone, according to a major survey of senior executives published today by EEF, the manufacturers’ organisation and Aldermore Bank.

The survey of 200 senior executives paints a more positive outlook than the very muted picture of twelve months ago, with growth expected in all markets and across all sectors and sizes of companies.

The survey also shows one of the sticky points of recovery, investment, expected to pick up with intentions in EEF’s last business trends survey the highest for six years.

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It comes as the North East Chamber of Commerce's quarterly confidence survey, a key bellwether of the regional economy, showed a 10-year- high, while a separate study by Lloyds Bank reported that business confidence was soaring for Northern firms. 

Two fifths of companies said they plan to invest moderately in the UK, EEF said, with a further fifth saying their investment would be significant. 

Overseas, one third of large firms plan to invest compared to a fifth of SMEs.

However, the extent of the difficult economic conditions of the last few years is emphasised by the majority of companies viewing ‘economic uncertainty’ as the new norm, with instability overseas and rising input costs, especially energy, being the biggest risks.

Andy Tuscher, Regional Director ( North)  of EEF, the manufacturers’ organisation, said: “Manufacturers are telling us they expect to make a greater contribution to growth, investment and jobs this year.  Innovation, energy and diversifying into new supply chain remain key opportunities but the UK and the eurozone are also looking better.]

"However, global uncertainty and rising energy costs pose significant risks and, the challenge for industry and government this year will be to get industry’s investment plans over the line.“  

Mark Stephens, deputy chief executive and group commercial director at Aldermore, said: “This report from EEF is both welcome and timely. 2013 has seen a growing sense of cautious optimism emerging amidst signs of a slowly improving economy. This is particularly good news for smaller firms, and vital within the manufacturing sector.

“At Aldermore we work closely with manufacturing clients across the country and are seeing first-hand what the findings of this report suggests. Clients are certainly more positive about the future of their businesses than this time 12 months ago, with a determination to capitalise on an improving UK market and to secure more business in new export markets.”

According to the survey 70 per cent of companies expect the UK economy to improve in the next year, with a similar number (62 per cent) expecting manufacturing prospects to improve.

This is mirrored in the outlook for the global economy where 57 per cent of companies expect an improvement. However, the perception of global risk is highlighted by the fact just 3 per cent of companies expect this improvement to be significant.

This improvement is being driven both at home and abroad with two thirds of companies expecting their domestic sales to increase and, 55 per cent of companies expecting their exports to increase, with almost 10 per cent expecting this to be significant.

However, despite this positive picture, the impact of the prolonged downturn on manufacturers is highlighted by the fact three quarters believing ‘economic uncertainty is the new norm’. A range of specific risks were also identified with rising input costs being the largest. 

Insufficient supply chain capacity was also flagged up as a risk, reflecting the hollowing out of the UK supply base and the need to build it back again, a key factor in encouraging inward investment in sectors such as automotive and aerospace. However, half of companies said they planned to work more closely with their suppliers in order to address this problem.