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The Importance of Manufacturing to the UK Economy

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It’s been a common refrain since the 1980s – “manufacturing in the UK is in decline” or sometimes even “manufacturing in the UK is dead”. This is usually accompanied by reminiscences about the strength of our mining, steel and car industries 40 years ago and mutterings about the over-reliance the UK economy places on service industries these days.

For those of us that manufacture products in the UK in the 21st century this is very annoying. It’s clear to us and our suppliers and customers that manufacturing in the UK is still very much alive. Ask anyone around the world what their perception of products manufactured in the UK is and they will reply “high quality and innovative design”.

So let’s take a look at the facts about what manufacturing contributes to the UK economy.

    • The UK manufacturing sector accounts for £192 billion of output employing 2.7 million people each with an average salary of £33,592 which is 13% higher than the rest of the economy.
    • Manufacturing accounts for 44% of our global exports which is worth over £273 billion to the UK economy.
    • Manufacturing accounts for 66% of R&D investment and 15% of total business investment.
    • The UK is the 9th largest manufacturer in the world by output and the 10th largest exporter of goods.

And how is manufacturing spread around the UK? Some of the figures might surprise you….

    • Northwest = £28.5bn
    • West Midlands = £21.7bn
    • South East = £20.3bn
    • East of England = £17.8bn
    • Yorkshire & Humberside = £17.6bn
    • East Midlands = £17.2bn
    •  Scotland = £14.4bn
    • South West = £14.3bn
    • Wales = £10.9bn
    • North East = £8.0bn
    • London = £7.8bn
    • Northern Ireland = £5.2bn

Where are our exports going?

    • USA = £118.2bn
    • Germany = £55.4bn
    • Netherlands = £44.0bn
    • France = £42.1bn
    • Ireland = £38.3bn
    • China = £23.1bn
    • Italy = £19.7bn
    • Switzerland = £19.6bn
    • Belgium = £19.4bnSpain = £17.6bn

This last set of figures makes it very plain that our trading relationship with the EU is extremely important and it is vital that Prime Minister Johnson negotiates a good deal that allows as frictionless trade as possible with these valued partners.

The EU, taken as a whole is the UK’s largest trading partner and in 2018 UK exports to the EU were £289 billion (goods and services which accounts for 46% of all UK exports). But UK imports from the EU were £345 billion (goods and services which accounted for 54% of all UK imports).

Do we need to improve productivity? Yes.

Do we need to massively increase investment in Industry 4.0? Yes.

But next time you hear someone decrying the state of manufacturing in the UK I hope you’ll challenge them and point to all the cutting edge technology we invent, develop and manufacture in the UK today.

For more information on this fascinating subject https://www.makeuk.org/ is a good place to start and if you really want to delve in to the statistics I recommend you visit https://www.uktradeinfo.com/Pages/Home.aspx