Manufacturers have had a more difficult year in 2005 than last. While their optimism has remained relatively strong in the face of a weaker UK economy and soaring costs, investment and employment intentions have recently taken a turn for the worse.

EEF’s biggest concern is that the government may decide to put up business taxes to meet any shortfall in its spending commitments. In a difficult economic environment the last thing business needs are tax increases, either directly or indirectly - for example through national insurance. We also believe that the UK tax system can be simplified to reduce the burden on business.

Energy issues remain a concern for our members. Many have seen energy price rises of between 50 and 80 per cent. To address this, the government needs to do more to push forward energy market liberalisation in the EU. With a decision also needed on the next phase of the EU emissions trading scheme, we believe that the UK should not set overly-ambitious carbon reduction goals if other member states are setting targets which are more generous to their own industries. Finally if the price rises continue then the government must look at freezing, or even suspending, the Climate Change Levy

In the immediate term, we have genuine concerns over industrial gas shortages if this winter is colder than average. In this event the government must put in place a strategy to communicate with business and take measures to minimise the impact of any interruption of supply.

EEF is supportive of the government’s commitment to tackling climate change, but if this is to be achieved then there is no time to lose in putting in place a long term energy strategy to provide a competitive, reliable and low carbon energy supply. This strategy cannot rule out any option, including nuclear.

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