Having seen a brutal 10% decline in output in 2020, the sector is now set to recover a significant amount of that loss in 2021 and will outpace the growth of the economy overall. This growth is based on a surge in both domestic and overseas orders which is translating into strong hiring intentions.
However, the figures are reflecting a recovery from a very low base with balances last year reaching record lows worse than those seen during the financial crisis. Between 2019 and 2020 the manufacturing sector lost approximately £18bn in value which will take more than a short-term boost of pent-up demand to return the sector to its pre-pandemic size. Assuming high effectiveness of the COVID-19 vaccine, Make UK forecasts suggest that manufacturing output levels will return to pre-pandemic levels by the end of 2022; which is earlier than previously forecasted.
Manufacturing growth is now firmly accelerating as restrictions have been eased and economies around the globe have started to open up. Looking forward there seems no reason to believe that this will not continue assuming the shackles come firmly off in the second half of the year.
Fhaheen Khan
Senior Economist, Make UK
Manufacturers have fought hard to recover from the brutal impact of the pandemic and have made great strides since the start of the year.
With investment intentions having turned positive for the first time since the first quarter of 2020, it appears the government’s introduction of the temporary super-deduction tax has provided the incentive manufacturers needed to bring forward their investment plans.
