Further evidence that UK manufacturers’ profits are being hit by the high value of sterling against the euro came this week in a survey of company accounts from the last quarter of 1999.
Engineering companies saw return on capital fall by 5% between the end of 1998 and the end of 1999, according to the survey by consultancy Experian. The chemicals and plastics sector was hardest hit, with a 32.2% drop in the same period.
`Significant investment is needed to bring the productivity up to our competitors’ levels,’ said a spokesman. `But while overall productivity has risen by as much as 10% over the past year, the pound has risen by 20% against the euro over the same period, which will affect willingness to invest.’
The only regions to see an increase in profits were East Anglia and the West Midlands – but the survey was carried out before BMW’s sale of Rover.
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