UK Manufacturing on the Rise
Good news for the UK economy: manufacturing is up! Amidst otherwise unpromising and uncertain times, UK manufacturing output is healthier than it has been for 30 years and is growing at the fastest rate since 2012.
For the current year 17/18, EEF, the Manufacturers’ Organisation, report that 2.6 million are employed in the sector, which makes up 44% of the UK’s total exports and 10% of our total output. When broken down industry by industry, food and drink manufacturing leads the way (16%), closely followed by chemical and pharmaceutical manufacturing and transport (both 14%), then metal, machinery, non-metal minerals, electronics and electronic goods.
On the whole, global demand is increasing, and the UK’s sector is expanding to meet the need. This year we’ve climbed a place in the world export rankings from 9th to 8th, behind China, the US, Japan, Germany, South Korea, India and Italy, but – crucially – overtaking France! According to the EEF, 70% of the public want the UK to aim for a place in the top 5.
At the end of last year, 42% of UK manufacturers said that they had increased output, with only 11% reporting that trade was down. Over half of all the companies said that they were going to employ more people. Happy days!
Before getting too carried away, however, we should probably address the secondary reason (and by all reports, it is secondary to increased global demand) for UK manufacturers’ fuller order books: the pound is weak, and foreign buyers are capitalising.
As with all things imaginable at the moment, a lot rides on the outcomes of the Brexit negotiations. Punitive tariffs could hurt a lot: the EU accounts for 48% of our total exports. In some parts of the UK, such as Wales, it could hurt a lot more, as countries in the EU buy 67% of their exports, which in turn makes up 17% of the region’s entire economic output.
Of course, it could also go the other way. Release from EU regulations would give more freedom and flexibility to negotiate trade deals and invest in research and development. Only two of the seven countries above us in the global rankings are in the EU.
In the meantime, this manufacturing boom puts us in a good place (well, at least a better place) to enter negotiations. It’s also giving UK manufacturers a helping hand in future-proofing their businesses, come what May.
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