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25 July, 2021 - 20:44 By Tony Quested

Manufacturers vital to East of England economy but lag UK’s best regions

The manufacturing sector accounts for almost 11 per cent of the East of England’s economic output although it still lags other regions of the UK in the relative strength of its bounceback.

A new report from Make UK, the manufacturers’ organisation, and business advisory firm BDO shows that manufacturing remains vital to the success of the regional economy and holds the potential for future growth.

The report highlights 209,000 manufacturing jobs in the East of England – some seven per cent of the region’s total workforce. On a broader metric, the East accounts for almost 10 per cent of UK total manufacturing exports. Good or bad, it is hard to tell, but the report says that the East of England has a lower than average dependence on the EU market.

The report analyses the overall status of industry in the region over the last 12 months in which the region – like many parts of the UK –  was hit hard by Covid. 
Since the start of the year, while the sector has seen conditions improve, the region currently lags other parts of the UK in the strength of its recovery. 

When looking forward to the next quarter, the majority of manufacturers in the East of England do expect output levels to expand on balance.

Approximately one-third of the region’s manufacturing output comes from the food & drink industry (15 per cent), machinery equipment (11.1 per cent) and electronics (10.1 per cent) combined. 

By contrast the real strength of the manufacturing sector is made up of a mix of many other industries highlighting the diversity of subsectors within this region. This includes transport equipment, worth over £1.8 billion, and basic & fabricated metals (£1.7 bn).

A particularly noticeable feature is the export order balances that have failed to keep up with the UK’s order balances since Q3 2020. This highlights the impact trade frictions with the EU have had on businesses and explains why the region’s dependency on the EU has also fallen during 2020 from 49 per cent of exports to 46 per cent, just below the national average.

The next largest destination for East of England’s goods is Asia & Oceania, accounting for 20 per cent of goods exports. This is followed by North America which accounts for 17 per cent of such exports.

Charlotte Horobin, region director for Make UK in the East of England, said: “The report shows that industry continues to have a central role to play in the success of the East of England economy.

“There are well documented challenges going forward, not least the major impact of Covid and the global economic downturn, the results of which are likely to be felt for some time to come.

“However, the region has clearly weathered the storm and, given the innovation we have seen over the last year, together with the acceleration of new technologies there are very positive signs for the future success.”

Keith Ferguson, head of manufacturing for BDO in East Anglia, added: “The East of England has a rich and diverse manufacturing base that is a large contributor to the local economy, employing more than 200,000 people in the region.

“Businesses were forced to rein in their investment plans and review their supply chains during the pandemic. Coupled with trade frictions as a result of Brexit, it’s been a tough year for the sector.

“It’s vital the Government smooths out critical issues such as customs procedures to avoid adding more layers of complexity and allow local manufacturers to build back stronger and better as we enter the second half of the year.”

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