Manufacturers are planning fresh investment over the next two years in a bid to boost productivity, according to a new report.
The EEF said a survey of 750 businesses showed a third believed the UK was a more competitive place to invest than two years ago.
The manufacturers' organisation praised the "supportive" industrial policies of the previous coalition and urged the Government to maintain the drive to improve skills, science and innovation.
Lee Hopley, chief economist at the EEF, said: "UK manufacturers' ongoing commitments to invest in technology, skills and innovation provide positive signals about the sector's future growth and productivity prospects.
"Some of the barriers that companies' investment strategies came up against following recession have clearly faded but it is vital that their current plans stay on track.
"Some sectors are facing some headwinds from more uncertain demand but big questions about the future economic prospects for European partners present one of the biggest external risks to firms' ability and confidence to press ahead with vital investment.
"UK efforts to build solid policy foundations are still needed to support the efforts of investment-intensive and highly productive sectors - like manufacturing - if the UK economy is to return to a more sustainable and balanced path of economic growth."
Ian Isaac, of Lombard, which helped with the study, said: "Manufacturers continue to lead the way for the UK economy, recognising that improved productivity is the key driver to deliver ongoing and sustainable growth.
"It is particularly encouraging to see that over 95% of companies plan to invest in raising their productivity levels over the next two years."