Eurozone Crisis Hampering Investment in Manufacturing Sector

Michelle Remo, “Big 4″ observer
November 09, 2011 /

Uncertainties brought about by the Eurozone could delay investments in the manufacturing sector, according to KPMG’s manufacturing practice partner.

“Despite GDP being up marginally a slow and challenging recovery is expected to ensue in the forthcoming quarters. However, the data from the UK manufacturing PMI represents a clearer picture of where manufacturing is heading in the short term,” said Glynn Bellamy.

“The sector is moving hesitantly forward with the knowledge that major export customers are revisiting expansion plans and investment in inventory as they attempt to assess the impact of the Eurozone crisis and general economic uncertainty on their end markets,” Bellamy added.

This could result in a delayed investment and uphold a ‘wait and see attitude’ in the manufacturing sector, according to the KPMG partner.

Bellamy said “manufacturers are having to contend with volatile markets and manage short term demand fluctuations whilst continuing to ensure capacity is retained to support the underlying global growth which is expected to continue, albeit very slowly.”

Meanwhile, UK Prime Minister David Cameron said he is urging Germany’s Bundesbank to lift its opposition to the European Central Bank’s proposal to use eurozone countries’ reserves to prop up the €1 trillion bailout fund.

“The world sent a clear message to the eurozone at this summit – sort yourselves out and then we will help, not the other way round,” Cameron said at the G20 summit in Cannes last week, the same message that he expressed before the House of Commons.

“The rest of the world can play a supporting role, but in the end, this work has to be done by the eurozone countries themselves. No one else can do it for them,” Cameron added.

Cameron warned that the Eurozone will collapse if the ECB does not take intervene further to bolster funds for the EFSF.

Cameron said he could not understand why some countries in Europe are so opposed to the ECB “being more of a monetary activist.”

“It is for the eurozone and the ECB to support the euro, and global action cannot be a substitute for concrete action by the eurozone. The G20 withheld specific IMF commitments at this stage precisely because we wanted to see more concrete action from eurozone countries to make their firewall credible and to stand behind their currency,” he said.

 

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