The annual Make UK/BDO Regional Manufacturing Outlook highlights manufacturers' contribution to economic regions of the UK in terms of output, jobs and investment. It also highlights the exposure of those regions with a high dependence on exports to the EU that are already suffering losses, but are also likely to be most at risk from a 'no deal' Brexit, barriers to trade and tariffs.
According to the analysis, Wales (almost two thirds), the North East and Yorkshire & Humber (both 60%) have a very high exposure to trade with the EU, the risks of 'no deal' are likely to be felt disproportionately by these areas in particular. The East Midlands is also not too dissimilar with manufacturing accounting for almost a fifth of its economy and the EU being its biggest market accounting for just over half its exports.
Wales and the North East both contain some of the most economically disadvantaged areas of the UK, a hard Brexit is likely to pose serious challenges for policymakers in these areas.
Firms are reporting weaker business activity overall, especially from the domestic UK market but export orders have increased slightly this quarter, indicating greater confidence from foreign customers about purchasing UK goods as concerns about an end of year no-deal Brexit fade.
Investment levels have slightly improved this quarter following a decline since the start of the year. While this is positive, and possibly a sign that the prospect of a no-deal Brexit is less of a short-term worry, firms are still facing an uphill battle.
Stephen Phipson
Make UK, CEO
Investment is critical to UK manufacturing. The sector is facing increased global competition and major change in respect of industry 4.0 and sustainability. An increase in first year capital allowances - something that a quarter of companies see as a priority for the new Government - would be a good incentive to boost capital investment in 2020 and beyond. This should be considered as part of a long-term sustainable industrial strategy.
