Manufacturing Outlook Q1 2024
18.03.2024
Britain’s manufacturers are facing the prospect of two years of low growth, with latest forecasts suggesting the rate for the sector will remain flat this year at 0.1%, before increasing by 0.8% in 2025 - just half the forecasted GDP rate for the economy overall.
The findings come from Make UK’s Manufacturing Outlook 2024 Q1 survey, in partnership with business advisory firm BDO. It also reveals that, despite the above forecasts, confidence levels among companies in the sector remain robust, with investment and recruitment intentions increasing on those in Q4 2023.
According to the survey, the balance on output fell significantly at the end of last year but is expected to rebound in the next three months. Total orders remained at similar levels but, likewise, are also forecast to improve over the same period.
Similarly, in the previous quarter, both UK and export orders were flat but are both predicted to improve, while the post-pandemic pattern of UK orders consistently exceeding export orders looks likely to continue after a brief reversal in Q4 2023.
Underlying sectoral and regional imbalances also look set to persist, with electronics, aerospace and food and drink powering ahead, whilst the South East and Wales are performing substantially better than other regions and devolved nations.
While manufacturers’ own confidence remains robust, the overall prospects for the sector are weak for the foreseeable future. While there are clearly external factors at play, the UK economy has a fundamental growth problem which a business as usual policy process simply will not address.
The next Government of whatever colour must address this fundamental problem as a matter of national urgency, beginning with a long-term industrial strategy which will really shift the dial on the UK’s economic performance.
Manufacturers have continued to show their ability to overcome wave after wave of challenges, but they cannot continue to do this indefinitely without some more long-term support from the Government. We have reached a tipping point where the ramifications of regional disparities may permanently affect the manufacturing sector, which could hamper future growth.
Now more than ever there is a strong case for policies and measures that will help UK manufacturers invest and expand. Despite the challenges, demand for labour and investment intentions remains strong and the next few months will be critical to the sector.
