Is British manufacturing taking a nose dive?

_85999756_proportion_of_gdp_624The last 10 years have been turbulent for British manufacturing. The sector grew gradually from 2005 to 2008, at which point it took a hit due to the global economic crisis. Recovery began again in 2010 and there was positive news of ‘green shoots’ until the beginning of 2012. However, there has been significant volatility since then. Most worryingly of all, the last 18 months have seen a terrific nose dive across most areas of UK manufacturing. Is this the end of the great British manufacturing resurgence we were promised?

Manufacturing currently accounts for just 10% of the output of the UK economy as a whole. If you look at the figures (right) you will see the full scale of the free fall in UK manufacturing since 1790 (where it accounted for around a third of GDP).

But what is considered to be the reason for the latest decline?

In recent years any growth in British manufacturing has, in reality, been more down to foreign investment rather than ‘proper’ domestic growth. Looking back, foreign investment was only ever going to be a brief plastering over the cracks. So, while politicians were last seen patting themselves on the backs and hailing themselves as saviours of British manufacturing what was actually happening was a lot more dangerous – basically selling the family silver.

Most recently there has been a big problem for foreign investors: the strength of sterling. A strong pound makes investing in the UK more expensive and it makes their products more expensive to export once they have been made. This has put the breaks on anticipated streams of foreign money to underpin the sector and shows the reality of the situation: Manufacturing is in dire-straits.

The headlines are doom and gloom at the moment. The only viable long-term solution is to help British owned manufacturing businesses do it on their own. Unfortunately, this does not seem to be the focus of our current government who seem intent on selling everything at bargain prices.

But let’s try to end on a more up-beat note – let’s take a look at a breakdown of what we do still make:

_85999755_what_we_make_624

 

Comments

  1. Terry Sullivan says:

    Yes, British manufacturing taking a nose dive, but why? Well, take cheap steel imports. Chinese know that once UK manufacturing base is destroyed then the price of steel is likely to rise dramatically because UK needs to buy? Govt & industry seem unable to see the long term consequences? Same principle applies to many industries diving because of cheap imports. Non of this happens in isolation, countries from which UK imports are doing so strategically in my opinion.

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  2. Chris says:

    We are now closing down steel works when in the near future we will need a lot of steel for HS2 and the new power stations, seems ironic ! Our government isn’t allowed to subsidise our industries while we are in the EU which makes a good case for leaving and investing in ourselves instead of giving the EU over 50 million pounds per day and when we get any back we have to spend it how they say. We need British investment into British firms for future security.

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    • Agree entirely, but I’ll make one correction if I may. I believe that the £50 million we hand over every day is the net figure, after deducting anything that comes back.

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  3. Its worse than this folks – try buying extruded aluminium from our of our 14 plants in UK…. sorry forgot I can only buy from one suitable one now as the rest are all gone 🙁
    so sad and not good for my company’s survival as all my products are made from this material !

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  4. Brent says:

    Emergency services continue to buy German vehicles,the British army buys German lorries half the cabinet drive around in BMW s and they wonder why manufacturing is in decline? Most Civil Servants should be exported to Germany. They’re all mad!!

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  5. Pound is far too high and the government doesn’t do anything to support British industry.

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  6. Good article.

    It’s particularly important that we can produce food and essentials, not only to reduce imports but also to ensure continuation of supplies, mindful of the current instability in the world.

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