6 days ago
Manufacturing in all UK regions is back above pre-pandemic levels
Manufacturing output across all UK regions is back above pre-pandemic levels for the first time, with a surge in aerospace and defence orders giving a particular boost to the southwest and northwest, the latest data shows.
A report published on Monday from the manufacturing lobby group Make UK and accountants BDO underlines the bounce-back from Covid, when grounded airlines, a lack of demand and supply chain disruption brought some factories to a halt. Risks remain, however, with President Trump's tariffs bringing new threats, particularly to the West Midlands, where the automotive sector accounts for a large part of the 26 per cent of the region's exports destined for the United States.
The latest data on output, to the end of 2023, shows that the southwest was the strongest performing region. It's running at 27 per cent above 2019 levels, followed by the east of England, at 21 per cent, and the northwest, ahead by a fifth. Before the latest data, only the West Midlands had remained below pre-Covid output, hit hard by the pandemic slump in automotive production and supply chain chaos.
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'It's taken some time, and some regions are striking forward at a faster rate than others, but hopefully the post-Covid malaise is now firmly in the rear-view mirror,' Fhaheen Khan, senior economist at Make UK, said. 'However, it's clear that we are likely to see a growing divergence between those regions and nations that have the sub-sectors where greater levels of investment are taking place.'
He said that, as a result of that, 'government must be mindful to ensure that growth is evenly spread' when it came to developing local growth plans.
The report also highlights the continuing decline in the share of goods exports to the EU for all English regions and nations. Wales remains the most dependent on the EU with 61 per cent of its goods destined for the bloc, even if that was a decline of around 10 percentage points since 2020.
The government's new industrial strategy, making advanced manufacturing one of its eight key sectors, was welcomed by Richard Austin, head of manufacturing at BDO. He pointed out, though, that companies would still 'need continued investment in design, innovation, and skills across the whole of the country if they're to weather global trade disruption'.
The report also shows that the number of manufacturing jobs increased by 12,000 in the 12 months to March 2024, bringing the sector's total to just under 2.6 million. There was, however, a divergence across regions and nations, with Wales and the East Midlands both seeing a 12,000 drop in manufacturing jobs, while the West Midlands and east of England saw increases of just under 10,000.
