Scottish Engineering: UK’s steeply rising interest rates having a knock-on effect in construction

Paul Sheerin (Scottish Engineering)

2023’s third quarter scorecard for Scotland’s manufacturing sector ends the run of increased orders that we have enjoyed since the middle of 2021, however manufacturing output remains positive along with industry optimism, reflecting increased forecast orders for the coming quarter.

Feedback from members point to the impact of the UK’s steeply rising interest rates having a knock on effect in construction, and steelwork fabrication in particular, alongside a case for patience as our annual work and holiday pattern return to something closer to the cycle we would see pre- pandemic.

Looking forward, an important index from this quarter shows that plans for capital investment have been on an increasing trend for the last eighteen months, with one quarter of companies planning an increased level of investment in this area, despite continuing cost challenges for people, materials and energy reported by almost three quarters of companies.

Scottish Engineering Chief Executive, Paul Sheerin, added:

“It’s always difficult where the pendulum for a key measurable swings from positive to negative to balance a reaction which faces facts versus choosing to call for patience. In this case with other indices remaining positive and a look back at a normal summer order profile, we opt to reserve judgement, mindful of the importance – and fragility – of business confidence in shaping our economy.”

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