BRITAIN’S manufacturers had hoped that 2011 would develop into a sustained recovery.

The sector was especially hopeful that a relatively weak pound would make exports more price competitive overseas. However, 12 months on, that hope appears to have been superseded by the eurozone crisis, which looks set to send British manufacturing’s principal market place into a downward spiral.

David Ost, chief executive of the EEF, the Engineering Employers Federation, said: “Last January pointed to the broad-based industrial recovery that began at the end of 2009 continuing. Since then, manufacturing has accounted for over a quarter of UK economic growth.

“For most of last year, this was borne out as manufacturers outpaced the rest of the UK economy.

“A competitive exchange rate, and the opportunity to sell into fast-growing markets overseas have helped, but this is far from the whole story. We have now a much more competitive manufacturing sector, which increased its productivity rise by almost a half over the last decade and increased its output per head by almost five times the economy overall over the past year.”

Looking ahead to this year, the eurozone government debt and banking crisis has gathered pace, weakening many of our major export markets and leaving industry facing greater uncertainty.

Mr Ost added: “However, in spite of the risks ahead, we should not forget there are still areas of growth. A number of sectors, including automotive, civil aerospace and mechanical equipment remain more optimistic and have seen significant investment and expansion plans announced.”

Emerging economies are continuing to post considerably stronger growth than the UK's European neighbours. Mr Ost said: “Increasingly, we hear from manufacturers that they are making major inroads into these markets, and this is backed up by trade statistics, which show that our exports to the BRIC economies have grown by a half since the beginning of 2009.

“The first half of this year, at the very least, is going to be immensely challenging, and policymakers and companies are likely to need to react quickly to changing circumstances. It is vital that government maintains a relentless focus on economic growth.”