CHANCELLOR Philip Hammond is being urged by a regional manufacturing leader to use the autumn statement to encourage more investment in modern technology amid ongoing Brexit concerns.

Andrew Tuscher, regional director of manufacturers’ body EEF, said: “It’s over to the autumn statement now to press ahead with policies that further enhance the UK business environment for spending on modern machinery and increasingly important intangible investment.”

His call follows the latest EEF/Santander Investment Monitor showing that manufacturers are set to reduce investment in plant and machinery over the next two years in response to increased uncertainty about demand.

It also confirmed the highest level of political uncertainty in the survey’s history following the EU referendum result which had increased caution about investing.

Mr Tuscher added: “Fears of an immediate collapse in business investment appear to be unfounded for now. Manufacturers have been investing at a healthy pace in recent years and while that rate of increase wasn’t going to continue forever, keeping up with customer needs and the competition is ensuring that investment stays on track for many.

“But, the spike in political risk should not go unnoticed. There is caution amongst businesses which will inevitably make it more difficult to get big decisions across the line.”

The monitor shows that short term investment remains stable, with 60 per cent of firms planning to spend about the same on equipment over the next two years. But EEF says the longer-term outlook is less certain.

The number of firms investing 25 per cent or more of turnover has halved to five per cent since 2014. Order book uncertainty is the main cause of falling investment confidence with around 43 per cent of firms citing it as a reason for not increasing investment.

The monitor shows manufacturers are increasingly focusing on intangible investments such as innovation and branding, broadening investment to tap into new markets and activity and the variation in investment across different manufacturing sectors.