The U.K.’s forthcoming economic recession is expected to be deeper than originally forecast. The EY ITEM Club forecast warns that a 0.7 percent contraction in U.K. GDP is now expected for 2023 and inflation is at the highest levels seen in four decades.
In terms of different ways to boost GDP and pull the nation out of the financial quagmire, the manufacturing industry could be the answer.
According to custom cable assembly manufacturer GTK, there are different ways through which a manufacturing boost could be effective. The company has outlined some important strategies that could be considered with Digital Journal.
The current state of play
There are some positive movements in the manufacturing sector. In recent months, business leaders have called on the U.K. government to prioritise funding for the industry with the knowledge that it could be key to unlocking economic success in the U.K.
In January 2023, the innovation centre announced that it will share £27.6 million of funding from the U.K. Research and Innovation’s Faraday Battery Challenge to develop and scale up battery technologies. This will help secure the future of electric vehicles and enable UK competitiveness within this field.
In addition, the U.K. government has announced funding to support energy-intensive manufacturing businesses to help them mitigate energy costs. Steel and metal manufacturing are included in this.
Together with other types of production, the manufacturing has performed better than expected at the end of last year. This seemingly prevented the U.K. economy from falling into a recession during 2022.
Yearly output
Rising costs and lengthy lead times for both parts and finished goods have been a concern since Brexit was first tabled, as the ending of the rule-based system restricted imports and exports to and from EU countries.
The impact of COVID-19 has only compounded these issues. For example, a Barclays report found that the manufacturing sectors most impacted by materials shortages include steel and metal, food and drink, plastics, and electronics.
John Morath, Managing Director at GTK explains: “Over three years on from the U.K.’s formal withdrawal from the EU and the first COVID-19 lockdown, global supply chains continue to be impacted, and many manufacturers are still struggling to source parts.”
He adds: “We knew how important it would be to mitigate these shortages in one of the most heavily impacted manufacturing sectors, so we built up our Core Material Strategy. With this, we stock high volumes of in-demand parts to reduce lead times and ensure our customers aren’t impacted by these shortages.”
Despite the continued impact of Brexit and COVID-19, Make UK’s annual analysis of the industry found that the UK remains the ninth largest manufacturing country in the world, with a yearly output of £183 billion. Over 50 percent of the sector’s total exports are goods manufactured in the U.K. These figures highlight the importance of manufacturing for the U.K economy.
To maintain this, the industry must remain agile in its understanding of supply and demand, allowing for the efficient provision of products. There is considerable importance attached to providing quality products quickly.
This agility and responsiveness are particularly essential as demand begins to rise again in 2023, especially in electronics manufacturing. The domestic and global markets have seen an uptake in activity for manufacturers in the first quarter of 2023, largely driven by this increased demand. With this upward trajectory, we can look to a healthy output for the UK manufacturing this year, highlighting how it can support the economy during difficult financial times.
The manufacturing industry has long been a key sector in the UK. Although it has experienced a few turbulent years, its forecast for 2023 is promising; and it could even help us mitigate the effects of a recession. In order for the sector to fulfil its role in leading the charge out of the recession, it requires support and an influx of new talent; and if that is achieved, the future is bright for UK manufacturing.
This is the topic of a continuation article.
