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UK manufacturers expect the euro

UK motorsport suppliers exporting into Europe may find of interest a new UK manufacturing outlook survey, to be released later this week by Cap Gemini Ernst & Young. It will find that Sterling is now very close to an "appropriate and sustainable" entry rate to the euro. The survey places such a rate at 64p. The rate in London this morning is just over 61.3p

British manufacturers are generally optimistic about growth prospects for the year ahead, with 67 percent expecting their business activity to increase. However this optimism is not predicted to translate into investment.

The research will also reveal that the firms taking part in the survey are positive about the projected growth of revenues, with 58 percent predicting an increase over the next year, and 17 percent forecasting a decline.

Over half the manufacturers (52 percent) see the euro as beneficial to manufacturing, against only 8 percent who thought it would harm them. Over two-thirds (68 percent) thought the UK would join the euro. On the whole, business volumes and revenues are expected to rise in next 12 months, as are profits, as a result of cost-control measures. Capital expenditure and headcount levels are expected to fall.

The main stimuli to business revenues are expected to be stronger global and UK economic growth, new product launches, and increased marketing activity. The principle threat to growth is the possibility of a downturn in economic growth and a strengthening of the Sterling exchange rate, adversely effecting international competitiveness.

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