MANUFACTURERS and exporters should be given more help if the Government is to achieve its aim of rebalancing the economy, a business advisory firm says.

Accountancy firm BDO has made the call at the start of Export Week following its latest business trends report showing optimism riding high among the region's services sector while manufacturers are increasingly gloomy.

BDO's new report shows a stark contrast between services and manufacturing with services companies expecting rapid growth in order books .

The firm's "optimism index", which predicts growth six months ahead, shows that services firms have a score of 104.2, well above the tend. In contrast, manufacturers are less confident with an optimism score of 90.2 .

BDO has warned that the continued divergence between the manufacturing and services sectors is putting the Government's plans to rebalance the economy at increasing risk.

It says short term economic prospects, as predicted by BDO’s output index, are more positive, with all sectors expecting strong growth and output over the next three months.

BDO says the contrast between the manufacturers’ output index, which reflects actual order levels, and the optimism index, reflecting judgements about how orders will develop , is stark.

The report suggests that manufacturers fear a sudden contraction into 2016, even though trading remains strong at present.

BDO warns that the trend could see the UK economy become even more unbalanced as sluggish manufacturing growth becomes entrenched and the UK becomes even more reliant on the service sector for growth.

Terry Jones, partner and head of BDO in Yorkshire, said: “These figures show that the UK needs to act now to support our manufacturing industry. The government must do more to encourage investment and help the sector to grow.

“The Government’s plans to encourage a more balanced economy are clearly right, but need to be accompanied by far more action. For instance, incentives to invest and plan for future success should be increased significantly.”

BDO is calling for a greater role for manufacturing in helping to rebalance the economy.

It wants zero VAT for domestic companies supplying UK exporters to match the zero rating for UK manufactured export goods.

BDO is also pressing for a higher annual investment allowance of £200,000, with a temporary increase to £500,000, to help manufacturers.

Ministers have been urged to take the "bold step" of boosting the annual investment allowance for expenditure on plant and machinery to £5 million for five years.