The year ahead: SMEs appear confident

The research found that although 54% of manufacturers said that they expected turnover to increase in the next 12 months, SMEs in this sector were most likely to predict both a general rise in salaries for full-time employees (63%) and for salaries to rise above inflation (16%)*. Manufacturers were the most likely in the survey to say that staff headcount will increase in the next 12 months (27%), signalling an expectation of increased orders as the wider global economy improves.

There is also generally high confidence that manufacturers will be able to recruit the right people (51%) and will be able to access the right digital skills (60%)

However the research did reveal concerns about barriers to business growth. Surprisingly for such an energy-dependent industry, the high cost of energy (cited by 40%) was not the main worry for manufacturers in relation to restrictions to SME businesses in Britain in general, as this was beaten by existing Government red tape (49%) and the lack of bank lending (42%).

These concerns were mirrored in manufacturing SMEs’ call for Government to reduce red tape (52%), increase tax breaks for business (49%) and make it easier to apply for public sector contracts (26%), which were all cited as examples of Government measures that would bring value to their businesses in the year ahead.

Jason Scagell, director of npower Business, said: "The UK manufacturing sector was particularly hard hit by the recession, so its great news to see that confidence is on the rise. It has become fashionable to say that the UK is a post-manufacturing economy, yet the sector is still the 11th biggest in the world and provides more than half of the UK’s exports. A strong manufacturing sector is crucial for a properly-balanced economy. Smaller manufacturers play a particularly important role within the wider industry, not least in the supply chain, so it’s critical that SMEs are given the right support to develop and grow.”

Paul Wilson, MD of EDM Zone in Newcastle, an npower Business customer, said: "Whilst we have seen demand rise and fall over the last five years, there is certainly more optimism than ever amongst myself and industry peers. In such a skilled and competitive industry, we are continually looking to drive both business growth whilst at the same time continuing to innovate. Having the right people is vital for the success of my business and it is vital that small businesses like mine are given the support they need by both Government and large businesses. If we can start from the ground up and work together to support UK PLC then we would expect a better business outlook over the next 12 months.”