At the MTA Economic Update event this week, we released the Spring update to our forecasts for the UK market for machine tools and cutting tools, as well as the new edition of the Global Machine Tool Forecast.  All of these documents and the presentations (we will update these next week with notes) from the seminar are available on the MTA website at – as this is a valuable member benefit, you will need your login and password to access these documents.


At the event, delegates heard Andy Goodwin, Chief UK Economist at Oxford Economics, set out a “good news – bad news” story of the UK economy.  His presentation focused on what had changed since last Autumn (our previous forecast round) and, of course, also included some headline information from the rest of the world.  The overall sentiment for many countries, not just the UK, is that 2023 looks like being less bad than we had anticipated but that 2024 looks like being less good.

In the near-term, despite some gloomy headline numbers, there are signs of an upturn in UK activity which is mirrored in various surveys and repeated in a number of countries.  We have already seen European gas prices fall sharply although thanks to the way in which prices are regulated, UK consumers will have to wait until July to see the benefit of this.

US consumer spending has been sustained by working through the excess savings built up during the pandemic – this effect has not been seen to any great extent in other countries, including the UK.  In China, an earlier than expected re-opening of the economy has boosted consumption there.  As a result, we are clear why the rest of the world has turned out better than expected but this is less obvious in the UK.

Normally when we have a downturn in the UK this is followed by a year or two of strong recovery but Andy set out six reasons why we don’t expect this to be the case this time.  These were:

  • Sticky inflation constraining real incomes.
  • Tight fiscal policy as stimulus policies end and tax are increased.
  • Tight monetary policy with interest rates unlikely to fall until 2024.
  • A correction in the housing market with prices currently around 20% over-valued.
  • Tighter credit conditions, although a banking crisis is not on the horizon.
  • A subdued global outlook, limiting the scope for exports to help.

As a result, Oxford Economics forecasts for the UK economy, especially for 2023 are on the cautious end of the spectrum and the risks remain skewed to the downside.  Over the medium term, demographic factors are a key obstacle to growth with many economies looking a lot like Japan in the 1970’s – the UK is not as bad as some major economies, but it is still a problem.

He concluded his presentation with a look at the recent budget and noted a wide range of forecasts for the UK economy over the period to 2027.  With Oxford Economics somewhere in the middle, he pointed out that the Bank of England has a pessimistic outlook while the Office for Budget Responsibility (OBR) seems overly optimistic – this matters because the plans for the Public Finances are based on the OBR view.


The second presentation at our update event covered the industrial picture – as with the macro forecast, this concentrated mainly on the UK position and our updated forecast for the machine tool and cutting tool market in the UK but the rest of the world was not ignored.

Indeed, we started with a look at the prospects for the global machine tool market and noted that following a flat trend in 2022, there is modest improvement in 2023, driven largely by Europe, before a more sustained acceleration in 2024.  The growth in Europe this year mostly comes from an unwinding of order backlogs rather than any underlying strength in the market, with the overall figure held back by a fall in the US machine tool market.

Turning to our forecasts for the UK, it was noted that 2022 had ended slightly more strongly than we anticipated 6 months ago and growth came out at +16% (was +14%) for the machine tool market and +10% (+8% previously) for cutting tools.  For 2023/24, the revisions to our forecasts diverge;  for machine tools we have downgraded the outlook for machine tool demand in 2023 to -8% but with a stronger rebound in 2024 at +6%, but for cutting tools, we now expect marginal growth in 2023 at +1% with a small acceleration in 2024 of +2%.

The rest of the presentation looked at the background and assumptions behind the revisions to the forecast and covered a variety of issue that affect both output and investment.  For the latter group, the main change since our previous forecast was the announcement of full capital expensing to replace the super-deduction scheme (the Autumn 2022 forecast had assumed no replacement).

The output changes are mainly driven by shifts in timings around the ending of supply chain shortages (which have eased more quickly than expected and helped the automotive industry) and the recovery certain industries, most notably aerospace.

One key point on the investment picture is that data on investment intentions, constraints on investment and capacity utilisation come from the CBI Industrial trends survey.  The next iteration of this is due to be published next week and in our report we will pick-up on how this fits (or not as the case may be) with the forecasts.

Before concluding the presentation with a look at the risks to the forecast and the implications of those for the global machine tool market (we don’t use the scenarios specifically for the UK only forecasts), the presentation ran through some of the industry specific issues.

For aerospace, although the industry is in the recovery phase, both of the major OEMs have announced plans to accelerate production over the next few years.  Output in the automotive industry has stabilized but the elephant in the room here is the electrification of vehicles and the implications that has for manufacturing locations.  Although there is little growth in prospect for the machinery and metal goods industries (the latter includes sub-contractors) there is  potential upside in the medium to long term in the form of the equipment which largely falls in these categories that will be needed as the UK – indeed much of the world – moves to net-zero carbon forms of power generation.

Finally a reminder that these presentations and the forecast documents are available to members via the MTA website at

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