Seamus Nevin
Chief Economist, Make UK
The figures don’t lie. The UK is among the top ten international manufacturing nations. It is integral the sector’s success continues to benefit the UK economy.
The United Kingdom has a long history of manufacturing. The Industrial Revolution, which marked a major turning point in global development, began in this country.
Almost every aspect of modern life was influenced in some way by the birth of modern business, born in the British manufacturing sector.
Although the manufacturing sector’s share of both employment and the UK’s GDP has steadily fallen since the Second World War, OECD data shows that manufacturing output in terms of both production and value has steadily increased over the same period.
Economic success in the UK is partly powered by the manufacturing industry
The latest Make UK annual compendium of manufacturing facts and figures highlights just how integral industry success continues to be to the health of the UK economy overall.
The figures provide an important reminder that the UK is still one of the biggest manufacturing nations. We want to see policy makers re-booting the industrial strategy, working with industry to help move UK manufacturing up the rankings.
The topline figures show that manufacturing accounts for two thirds of overall R&D, 45% of exports, 15% of business investment and 2.7 million high-value jobs.
Seven top export destinations are in the EU
This year’s analysis could not be coming at a more timely point in the economic and political cycle, as the critical importance of the UK agreeing a deal with the EU, which avoids barriers to trade, is laid bare.
While exploring new markets is vital, we cannot avoid the geography that shows the value of trade with the bloc is worth more than twice that of the United States, with seven of the UK’s top export destinations being within the EU.
Access to the EU is a priority for UK manufacturers
While it is true that the United States is the biggest export market, worth £118.2bn, exports to the EU amounts to more.
The importance of our near neighbours as export markets, for UK goods, cannot be overlooked. This country still sells more to Ireland (£38.3bn) than to China (£23.1bn).
Clearly geography matters in international trade. For UK manufacturers, access to their biggest market remains a priority.
Transport (25.5%) and pharmaceuticals & chemicals (17.9%) sectors dominate the export picture of manufactured goods. This highlights the importance of these sectors to the success of UK industry overall – with focus on the aerospace and automotive sectors in particular.
The importance of these top two exporting sectors is also reflected in contributions to business R&D, where pharmaceuticals & chemicals and the transport sector accounted for almost 70% of the total spend.
The transport sector also led the way in export growth, increasing by 7.4%, largely on the back of continued growth in aerospace. This was closely followed by food and drink, which increased exports by 5.3%.
The UK must avoid barriers to trade with the EU
Food & drink remains the single biggest sector contributing 15.1% of GVA, closely followed by transport (14.9%) and pharmaceuticals & chemicals (14.2%).
The analysis also debunks the myth that manufacturing jobs are solitary, low paid, ruthless, or short. In fact, the average salary in manufacturing is 13% above the rest of the economy at £33,592, compared to £29,832 for the whole economy and way above the services sector at £29,014.
While the UK has a long history of proud manufacturing, the next few months could be crucial for the future of the industry in this country. Our analysis makes clear the overwhelming importance of trade with our closest market and the need to avoid imposing any barriers that will make this more difficult