Aerospace & defence spending driving growth in
strongest performing regions
Key findings:
-
All English regions and devolved nations surpass pre
pandemic output
-
South West, East of England and North West strongest
performing regions
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Some regions likely to be more exposed to impact from
US tariffs
-
Trade barriers bringing continued decline of exports to
EU
-
Manufacturing jobs increase by 12,000
All English regions and the three devolved nations have seen
manufacturing output rise back above 2019 levels for the first
time (1) according to a major report published today which
analyses the contribution of manufacturing to each English region
and nation
The Make UK/BDO annual Regional Manufacturing Outlook report
examines various official data including output, employment,
sector strengths, exports and wider trade patterns.
The latest data on output to the end of 2023 (the latest data
available) shows that while all regions and nations are back
above 2019 levels, the South West was the strongest performing
region with output more than a quarter (27%) above 2019 levels.
This was followed by the East of England (21%) and the North West
whose output was up by a fifth.
According to Make UK, the growth in the South West and North West
in particular is likely to have been driven by a surge in
spending by the aerospace and defence sectors, due to large
orders from the major airlines for new aircraft and, the ramping
up of defence spending across Europe.
These are the biggest sub sectors in each region, accounting for
more than a quarter (25.8%) of output in the South West and just
under a quarter (23.5%) in the North West. Output in the North
West is also likely to have been aided by increased production in
the Automotive sector following the post Covid slump.
Commenting, Fhaheen Khan, Senior Economist at Make UK said:
“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. What this year's report does
show, however, is 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. In developing
Local Growth Plans, many of which will see Advanced Manufacturing
play a central role, Government must be mindful to ensure that
growth is evenly spread.”
Richard Austin, Head of Manufacturing at BDO added:
“The impact of the pandemic on the manufacturing sector can't be
understated. Having battled grounded flights, reduced demand and
disrupted supply chains - to see manufacturing bounce back with
such renewed force is a testament to the industry's resilience
and the strength of the regions they are working in.
“As these sectors pick up pace once again, they'll need all the
help they can get in order to maintain the UK's position as a
global leader. The industrial strategy is a good start but
they'll 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 there is likely to be a diverging
impact of US tariffs across all regions and nations with some
more heavily exposed to the US market than others. The West
Midlands has the strongest exposure with automotive exports
accounting for a large part of the 26% of West Midlands exports
destined for the US. The East of England (22%) and London and the
South East (18%) also have a proportionately larger share of
their exports going to the US than other English regions and
devolved nations.
Furthermore, the report also shows a continued decline in exports
to the EU for all English regions and nations. Wales remains the
most dependent on the EU with almost two thirds (61%) of Wesh
goods destined for the bloc, although this figure represents a
decline of around 10% since 2020 when approximately three
quarters of Welsh exports went to the EU.
The survey also shows that the number of manufacturing jobs
increased by 12,000 in the twelve months to March 2024. This
brings the total number of jobs in the sector to just under 2.6
million. However, there was a sharp divergence across regions and
nations with Wales and the East Midlands both seeing a decline in
manufacturing jobs by 12,000, while the West Midlands and East of
England saw increases of just under 10,000 jobs.
Ends
Notes to Editors:
- Only the West Midlands still remained below pre Covid output
levels until the latest data. This is due to the slump in
automotive production and the impact on the supply chain in this
region.
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https://drive.google.com/drive/folders/1qgMjB6j3hMeNFELM11NpJB2BJ7Mqlgo-?usp=sharing
