Manufacturing companies need more investment to enable the delivery of new products and services, according to a report by UK manufacturers’ organisation EEF.

The report found 47% of smaller firms have investment plans which remain unfunded due to the cost, availability or terms and conditions of external finance.

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The report, which surveyed more than 250 companies, shows 90% want to invest to improve productivity, 75% to improve technology and 70% to develop capacity to create new goods.

It found half of the companies had increased their capital expenditure, with only one in ten reporting a decline in investment. However, a third of the manufacturers felt "the gap between what they want to invest and what they actually invest is growing", while a fifth said they are falling behind their international competitors.

Terry Scuoler, chief executive of EEF, said: "Manufacturers are telling us they have ambitious strategies for growth but many are also saying they are not investing enough to deliver them. We need to close this gap between ambition and reality by overcoming the barriers to investment facing manufacturers."

In a statement released before EEF’s National Marketing Conference, Andy Hart, interim managing director of Lombard, the event’s headline sponsor, said capital investment remained "fundamental to the UK recovery", and added 2012 showed some positive signs.

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He said Lombard’s year-on-year lending in 2012 was up 10%, along with an "astonishing" 66% increase to manufacturing businesses. The latest figures from the Finance & Leasing Association show asset finance for plant and machinery equipment was up 12% year-on-year for 2012.

Hart added businesses were choosing smarter investments, becoming more "switched on" to "non-traditional" lending options and taking on debt which is "appropriate to their requirements."