Midland manufacturing bosses say the UK economy is ‘moving through the gears’ – but warn momentum could be lost without improved investment.

EEF, the manufacturers’ organisation, has upgraded its forecasts for economic growth this year, but warned of significant risks if programmes of investment fail to make up the ground lost in the last five years.

Publishing its half-year ‘Economic Prospects’ report, EEF is expecting the UK economy to gain momentum this year as increased consumer spending remains a key driver of growth and improved confidence supports a recovery in business investment.

As a result, EEF is now forecasting GDP growth of 1.1 per cent this year, up from 0.9 per cent. Growth is then expected to steadily increase through 2014 to 1.8 per cent.

While manufacturing is expected to contract this year by 0.7 per cent due to a poor end to last year, output is expected to pick up in the second half of the year and expand by 1.9 per cent next year.

EEF Midlands Region Director Richard Halstead said: “The events of the last few years have heavily impacted on manufacturing but we are now seeing far more positive signs that growth will pick up.

“With the UK economy beginning to move through the gears and,glimmers of hope in the Eurozone, this should translate into more broad-based growth for manufacturing in the next few years.

“However, significant risks remain, particularly the continued failure of investment to show signs of life. We are still some way behind the previous peaks and, if we are to benefit from continued research, innovation and export growth then investment needs to pick up substantially.

“A failure to do so could see a build-up of problems in the supply chain and our competitive position slipping.”