Britain’s manufacturing sector is experiencing a notable upturn in growth prospects, buoyed by increasing output and orders, according to the latest Make UK Q2 Manufacturing Outlook Survey. The survey indicates that the sector is poised to outpace the broader economy this year, marking a significant recovery from a two-year slump post-COVID-19.
Business confidence within the manufacturing industry has surged to its highest level in a decade, reflecting optimism as companies anticipate emerging from the pandemic-induced downturn. The survey underscores a strong call from manufacturers for the next government to prioritize delivering a robust industrial strategy. Make UK emphasizes the need for this strategy to focus on a skills revolution, citing critical shortages that are hindering growth and operational capabilities across the sector.
Currently, the manufacturing sector faces a shortage of vocational skills, exacerbated by a decline in Level 2 and 3 engineering apprenticeships. Make UK estimates that there are approximately 64,000 vacancies in manufacturing, leading to an estimated £6 billion in lost output. Addressing these skills gaps is identified as crucial to sustaining growth and fulfilling contractual obligations.
In addition to skills development, the survey highlights the industry’s desire for the government to improve relations with the EU, the UK’s largest market for manufacturers. Since the Trade and Cooperation Agreement came into force three years ago, businesses on both sides have encountered friction, prompting calls for strengthened bilateral relations.
James Brougham, senior economist at Make UK, emphasized the importance of capitalizing on the current economic momentum with a forward-looking industrial strategy that extends beyond the immediate future. He called for comprehensive government support and a fundamental review of the Apprentice Levy and vocational training systems to underpin sustained growth in the manufacturing sector.
Looking ahead, the survey projects robust growth in manufacturing output and orders for the upcoming quarter, driven by increasing export demand and an improving economic outlook. Recruitment intentions among manufacturers are also on the rise, reflecting efforts to meet anticipated demand.
Despite moderated investment intentions, manufacturers remain optimistic about the sector’s trajectory and have outlined clear priorities for the next government. These include delivering a strategic industrial plan, enhancing EU/UK relations, reducing business tax burdens, investing in national infrastructure, and reforming vocational training initiatives.
Make UK forecasts a 1.2% growth in manufacturing for 2024, outpacing the projected GDP growth of 0.9%. The survey, conducted among 320 companies between May 15 and 29, provides a comprehensive snapshot of the sector’s current sentiment and future expectations amidst evolving economic conditions.