What’s going on with the UK manufacturing industry

Britain’s manufacturing sector is more significant than official figures originally suggested, according to a report that underscores the impact on the economy of tariff barriers with the EU.

The report states that official statistics, which suggests that the manufacturing output accounts for 9% of national income, and are based on “outdated and inaccurate methods of counting” as the figures are much higher. This is good news as ink manufacturers, factory employees, and the car industry will see the benefit.

There have been multiple articles on the subject of the UK manufacturing industry, 2 of which are from the month of June 2019 and state that the manufacturing sector is shrinking. Another suggests that manufacturing orders have dropped to the lowest level in 3 years. Another talks about the vulnerability of the business due to post-Brexit tariffs. There has been widespread lousy news in the industry, but a Cambridge University for the Department for Business, Energy and Industrial Strategy reported that vast bulk of UK exports are more vulnerable than initially stated.

“It is essential that policymakers have accurate information on the size of manufacturing sectors to develop an internationally competitive industrial strategy,” Eoin O’Sullivan, one of the report’s authors replied.

“In particular, policymakers need to be able to measure manufacturing in a way that better reflects how firms organise themselves into value networks.”

In the report, they avoid correctly putting a figure on the proportion of GDP accounted for by the sector, but it could be nearer 15%. Included in this estimate was the sale of Uk-made products, including contracted services and engineering support.

Though there has indeed been a steep decline in car production due to Brexit uncertainty and the trade war between China and America had pushed the manufacturing sector into a recession. Due to this, the UK economy decreased by 0.4%.

The UK isn’t alone in this phenomenon. Manufacturing has been down all over the world but has fallen more sharply for the UK, and production has been down since 1990, which had accounted for 17% of GDP.

An update is to be expected from ministers to help the government’s industrial strategy. It appears that service industries will replace lost employment, as agriculture shows a decline as well.

“This report is a clarion call for politicians of all parties to update their understanding and recognise the central importance of manufacturing not only to local regions but to the wider UK economy as well. An increasingly outdated understanding of what modern manufacturing is means policymakers have neglected the sector in the misguided belief that services, not manufacturing, is where the future potential for innovation and productivity growth lies.” Says Seamus Nevin, chief economist of Make Uk.

Jostein Hauge, who co-wrote the report, said that the last estimated manufacturing study from the Manufacturing Technologies Association estimated that manufacturing might be as high as 23% of the GDP when accounting for other services.

“We haven’t put a figure on the size of the manufacturing sector in our report, but it is closer to 15%, which is still much larger than the current official figure,” said Hauge.

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