Lloyds Bank Commercial Banking’s Business in Britain report surveyed 200 of the country’s largest manufacturers with a turnover of £50m or more and found almost four in five (79%) forecast their turnover will increase over the next five years, and by an average of 12%.

Among exporters – 93% of those businesses surveyed – more than half (55%) said demand from overseas buyers was growing, while just a sixth (16%) said it was declining.

Even amid uncertainty over the UK leaving the EU, a third (33%) of manufacturers said the EU would remain their most important growth market for the next five years, followed by China (15%) and North America (13%).

But almost half (47%) of firms said the impact of the UK leaving the EU is a threat to growth and is a greater threat to growth than cost pressures (45%), political uncertainty (44%) or weak growth in the UK economy (43%).

A significant number (60%) say their strategy includes boosting research and development budgets, which they plan to increase by an average of 13%.

Nearly half (49%) believe new product development will power their growth, alongside investments in IT (30%), new equipment (24%) and increasing capacity (22%).

A fifth (20%) believe improving productivity will support their expansion, together with investing in their existing product range (20%) and entering new export markets (18%).

Steve Harris, head of manufacturing for large corporates at Lloyds Bank Commercial Banking, said: “Manufacturing is a significant part of the UK economy – it represents 10% of economic output, 70% of all business research and development spend, and directly employs 2.7 million1. UK manufacturers have a proud history of high-quality products and innovation, which could be one of the reasons for the growing demand from overseas.”

Sustainability sits at the heart of modern manufacturers’ strategies, with two thirds (67%) saying they will invest in sustainability in the next two years.

They will do that by reducing waste or recycling more (50%), cutting their energy use (44%), encouraging office employees to reduce energy use (43%), changing manufacturing materials or processes (31%), sustainable procurement (26%), cutting back on travel (25%) and making distribution fleets greener (22%).

Harris added: “Sustainability is not just a buzz word, it’s a social expectation and a reality for businesses today. Whilst this could be seen as a challenge for manufacturers, they’re seeing it as a real growth opportunity and are grabbing it with both hands.

“Their commitment to capitalising on opportunities that exist in a modern global economy must be recognised, and it reaffirms why we are committed to supporting manufacturers with the resource and expertise they need to grow their business.”