ENGINEERING firms in Yorkshire expect to remain in recession until the end of 2017 following the Brexit vote as confidence has tumbled, new findings show.

Firms are particularly worried about exchange rate volatility and expect worsening trading conditions over the next six months, according to EEF, the manufacturers’ organisation.

Its latest survey shows that, while firms report little immediate impact, key concerns going forward are exchange rate volatility – cited by three quarters of manufacturers; political uncertainty (65 per cent), expected increased costs (59 per cent) and weaker demand (49 per cent).

While 53 per cent of firms see the weaker pound as an opportunity, a third have already seen input costs rise and 51 per cent expect this to continue over the next six months.

Nearly 60 per cent of firms say they will review their UK recruitment and 57 per cent will be reassess UK investment, with 16 per cent acting immediately.

Andy Tuscher, EEF Yorkshire director, said: “Rather than an immediate storm, it is clear that manufacturers see the real risks from the referendum outcome presenting over the next six months to a year.

“While many are acutely aware that we are still in the early days, exchange rate volatility, political uncertainty and the danger of increased costs are already on their risk radar and subsequently we can already see confidence starting to drain away.

“The post-referendum drop in the value of sterling has been helpful to some manufacturers, but the overall impact is too nuanced for it to be glibly hailed as the hero of the piece.

“In the next six months, over half of manufacturers expect input prices to increase and that probably tells you everything about why the drop in sterling is a double-edged sword.

“All of our forecasts now point to our sector remaining in recession until at least the end of 2017. This means that, more than ever, we need government to keep a firm and steady hand on the tiller.

“This means providing a stable business environment, scrapping burdensome policies and planned levies that add to our costs and reinstating a long-term national industrial strategy. The Government cannot wipe away the risks that Brexit will cause, but it can provide manufacturers with the reassurance and confidence to invest and seek growth from Brexit’s opportunities.”