The machinery and assets of the UK’s manufacturing sector is now worth less than it was in 2005 following years of underinvestment during the recession, according to figures from the Office of National Statistics (ONS).
Figures from the ONS show underinvestment by manufacturers in net capital stock, at chained volume measures that adjust for inflation, may have seen values erode by £8.4bn (10.75bn) from the start of the credit crunch in 2008 to stand at £245.5 billion at the start of 2014.
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UK broker LDF said this means the UK manufacturing sector will have lost ten years of investment since 2005 as UK businesses postponed capital investment due to a shortfall in traditional funding sources.
The purchasing manager’s index (PMI), a measure of confidence in the manufacturing sector, points to improved expectations for coming months, said LDF.
Peter Alderson, managing director of LDF, said: "In the last six years the value of UK manufacturers’ equipment has dropped, while key global rivals in China, Korea and Taiwan have invested relentlessly. If UK manufacturers are going to compete, a huge programme of investment is needed to catch up."
"The pace of technological change means that equipment becomes out-of-date more quickly than ever before. In a globalised economy the UK’s manufacturers are competing with businesses from all corners of the planet. Any inefficiency translates to either higher cost for customers or lower profits for manufacturers."
