The latest survey from the EEF and the business-advisory group BDO has found that Britain’s manufacturers have enjoyed “a solid end to the year”, with positive figures on output and orders continuing to feed through into investment and job creation.

The Manufacturing Outlook survey reveals that the engineering sector is on track to grow 3.5% this year, outperforming the rest of the UK economy as a result of a “buoyant domestic market”. However, the EEF said that export figures are disappointing, which has led to manufacturers “moderating” their outlook for growth next year.

Global uncertainty, especially the weak performance of the euro-zone, is also contributing to a more cautious outlook in the short term, the survey found. Lee Hopley, chief economist at the EEF, said that it had been “a solid year” for manufacturers.

She added: “There have been some notable areas of strength this year, especially among sectors which rely on demand in the home market. Overall, we should see a good balance of sectors and sizes delivering positive news on output, jobs and investment this year.”

Meanwhile, Tom Lawton, head of manufacturing at BDO, said: “The relative strength of the UK’s economy is allowing continued manufacturing growth against the headwinds of poor export markets. The sub-sectors that are doing particularly well are those that feed into the strongest areas of our domestic market; for example, those that supply the automotive, aerospace and construction industries. It is critical that the UK’s recovery remains on track to maintain growth, investment and employment in the sector while foreign markets recover and regain their appetite for UK exports.”

However, a report from the IPPR ‘think tank’ says the UK’s poor export performance is not simply due to weak euro-zone demand. Indeed, IPPR argues that “while Britain still has some industrial strengths — such as aerospace, pharmaceuticals and cars — its export basket has become less diverse since 1995”.

Tony Dolphin, the IPPR’s chief economist, said: “We are good at exporting services but, with a very few exceptions, poor at exporting goods. As a result, the ‘export-led recovery’ promised by the Chancellor of the Exchequer has not happened. The UK is living beyond its means in the global economy, and has been doing so for some time. The country has to take on the tougher task of developing new export strengths.”