MakeUK BDO
Britain’s manufacturers are backing the new Government’s aim of driving growth more evenly across all UK regions, with the results of a survey showing that performance in manufacturing continues to diverge across the UK.
According to the Regional Manufacturing Outlook survey for 2019 Q4, published by Make UK and business and advisory firm BDO LLP, industry in London and the South East is “booming”, with growth indicators far outstripping any other UK region in five out of six survey indicators, in most cases by a substantial margin.
The average balance for total orders across the UK was +6 per cent whereas in London and the South East it was +21 per cent.
The difference was even more stark for domestic orders (+30 per cent compared to a national average of -5 per cent) and also for export orders (+39 per cent compared to +10 per cent).
This divergence was also reflected in employment prospects, with intentions to recruit by London and South East manufacturers at a balance of +26 per cent compared to a national average of +6 per cent.
Strong areas
London and the South East is already the second largest manufacturing region in the UK, just behind the North West, employing over 400,000 people and worth £28.1bn annually.
It is benefitting from the global growth in investment in new technologies linked to the fourth industrial revolution such as robotics and artificial intelligence, a pattern which is only expected to increase
By contrast, the survey shows that the West Midlands in particular is suffering acutely from the problems in the automotive sector, with all six of the survey indicators in negative territory.
The balances in total orders and output showed the biggest declines in the UK in the final quarter of the year while the region’s balance for UK orders was also the worst across the UK.
Future implications
In addition, the balances for investment intentions were negative in the North East, North West and in both the East and West Midlands which has important implications for the long-term performance of industry in those regions. The only positive picture for investment intentions across the northern half of the country was in Yorkshire and the Humber.
According to Make UK, given the high dependency of all these regions on manufacturing with a number of constituencies which have recently voted Conservative having a much higher than average dependence on manufacturing employment, it backs the emphasis by the new Government on investment in these regions.
Make UK Chief Economist, Seamus Nevin, said: “There is now a clear two-speed economy in manufacturing performance with London and the South East at full speed while some other regions are stuck in first or second gear.
“While there are a number of global factors impacting on the performance of some regions industry will support the new Government in any drive to boost growth and investment across all UK regions.”
Tom Lawton, head of manufacturing at BDO, added: “The old north-south divide is unfortunately still very much in play when it comes to industrial performance. Industry will be keen to see the new Government promote investment, skills and employment across the whole of the UK to re-balance growth.
“Currently, some sectors such as automotive are also facing a potent combination of structural factors that are posing great challenges for those companies and supply chains who depend on them. As part of efforts to spread growth more evenly, it’s essential that policies are put in place to safeguard the regions where these key sectors are so important to their prosperity.
“Manufacturers will hope the start of a new decade and a fresh Government will secure a renewed focus on delivering a long term, modern industrial strategy to ensure industry can be at the forefront of tackling the societal and technological challenges we face.”