Authors Say Findings Are Crucial For Future Brexit Trade Discussions

A new report argues that the size of the UK’s manufacturing sector is much bigger than official statistics suggest.

The study by Cambridge University’s Institute for Manufacturing has been produced for the Department for Business, Energy and Industrial Strategy (BEIS).

Authored by Dr Jostein Hauge and Dr Eoin O’Sullivan, ‘Inside the Black Box of Manufacturing’, says official statistics underplay the contribution that the sector plays in the wider economy.

In the context of Brexit, the report say it’s vital that UK negotiators seeking new trade agreements are equipped with a solid understanding of manufacturing’s importance to the economy.

The current estimate is that manufacturing output accounts for 9% of national income but the report says it is nearer to 15% once activities tied to the sale of UK-made products, including engineering support and contracted services, are taken into account.

Dorrien Peters, partner and Head of Manufacturing at law firm Irwin Mitchell, said:

Expert Opinion

“This report is very interesting and it is right to highlight the significant role that manufacturing plays in the wider UK economy.

“I’m particularly interested in the main finding that the manufacturing sector is actually much larger than official statistics suggest. This is something that clearly should be considered carefully and be allowed to inform both the government’s future industrial strategy and Brexit negotiations.”
Dorrien Peters - Partner

Eoin O’Sullivan says: “It is essential that policymakers have accurate information on the size of manufacturing sectors in order to develop an internationally competitive industrial strategy.

“In particular, policymakers need to be able to measure manufacturing in a way that better reflects how firms actually organise themselves into value networks.”

Seamus Nevin, the chief economist of the trade body for manufacturers, Make UK, said: “This report is a clarion call for politicians of all parties to update their understanding and recognise the central importance of manufacturing not only to local regions but to the wider UK economy as well,” said Seamus Nevin, Chief Economist at Make UK.

“An increasingly outdated understanding of what modern manufacturing actually is means policymakers have neglected the sector in the misguided belief that services, not manufacturing, is where the future potential for innovation and productivity growth lies. The Government has set out a modern industrial strategy which will be at the centre of the UK economy post Brexit.

“It is now essential that there is cross-party support to deliver on this to ensure we meet the new technological challenges of digitisation, as well as the societal challenges to which manufacturing, science and engineering will be at the heart of solving.”