A new report from Make UK, the manufacturers’ organisation, and accountancy and business advisory firm BDO LLP shows that manufacturing continues to be an important part of the South East economy as the increased move towards digital manufacturing gathers pace.
The report also shows that while the EU as a market for exports is slightly below the UK regional average it remains by far the most important. As a result, Make UK has stressed the vital need to secure a trade deal with the EU before the end of the year that avoids trade barriers. Failure to secure such a deal risks significant damage to prospects for industry in the region.
According to the report, which analyses the overall status of industry in the UK regions over the past 12 months, the South East saw a drag on growth from the global downturn even before the impact of Covid 19. However, while acting as a further drag the impact of the pandemic on output and orders has not been as severe as other UK regions because of the dominance in the South East of the Electronics and Food and Drink sectors.
Increased moves towards digital manufacturing are driving both domestically produced good and exports, while the spike in demand for food and drink products has offset to some degree the temporary shutdown of the hospitality sector. As a result, the impact on both investment and recruitment has not been as negative as other UK regions.
The region is dominated by three sectors which account for approximately 40% of output in the South East. Electronics is the largest with 15.6% of regional output, followed by Food and Drink at 14.5% and Transport Equipment at 8.8%.
The South East continues to be a very strong export performer, accounting for a quarter of total UK manufacturing exports. The EU is the region’s main export destination (44%) followed by North America (21%) and Asia & Oceania at 17%.
Commenting, Jim Davison, region director for Make UK in the South East of England, said: “The report shows that industry continues to have a central role to play in the success of the South East economy.
“There are well documented challenges going forward, not least the major impact of Covid 19 and the global economic downturn, the results of which are likely to be felt for some time. Furthermore, the outcome of trade talks with the EU and US has the potential to have an impact on the future performance of manufacturers in the Region given the exposure to both markets. If we are to avoid a double whammy hit on the sector it is essential that the UK agrees a trade deal in particular before the end of the year that prevents barriers to trade and avoids tariffs.”
Arbinder Chatwal, head of manufacturing at BDO in Southampton said: “The region’s manufacturers were already facing huge uncertainty over the UK’s future trading relationships, even before the seismic shock of Covid-19. Many have stepped up to support the country at a time of crisis. But they now urgently require the Government to deliver a trade deal with the EU that protects their interests and allows them to plan – in addition to a longer term recovery package which encourages investment in skills, digital transformation and a greener future.
“As the furlough scheme begins to wind down, many of the region’s manufacturers will face difficult decisions on jobs and investment, so it’s vital that their pleas for support are heard loud and clear by policymakers both locally and nationally.”