UK manufacturers look East as production hopes rise
UK manufacturers are ditching President Trump’s United States and looking to find trading partners in Asia and the Middle East, according to a leading industry body.
The US has fallen out of the top three preferred regions as a growth market for UK manufacturers, the first time since surveys started eleven years ago, Make UK suggested.
The EU remains the top choice for UK manufacturers, with half of 324 companies surveyed claiming they were positive about orders for products being made in European countries.
Six in ten companies expected their export volumes to the US to be hit, Make UK said, which would come off the back of bleak data published by the Office for National Statistics (ONS) last week showing exports of goods across the pond fell by £2bn, the biggest monthly decline ever recorded.
A third of companies also told industry researchers that they were re-evaluating production lines, while some firms said they were considering setting up facilities in the US.
But there were some “pockets of positivity”, according to BDO analyst Richard Austin, who helped to produce research as manufacturers appeared to be increasingly resilient.
Make UK’s latest report revealed that firms were slightly more positive about the year’s third quarter, with an expected increase of 11 per cent in output and 13 per cent rise in total orders.
But growth forecasts are bleak as manufacturing is expected to suffer a 0.2 per cent downturn this year and a further 0.5 per cent drop in 2026, a downgrade from a previous projection of a one per cent expansion.
“This quarter’s results are a testament to the increasingly challenging landscape our British manufacturers are operating in,” Austin said.
“Growing output levels are proof of manufacturer’s resilience and last month’s trade deals should remove barriers as UK companies seek new trading partners and opportunities for growth.”
Manufacturers suffering from recruitment problems
Make UK chief economist Seamus Nevin pointed to concerning data on recruitment intentions, which remained flat in the second quarter, and a further decline in investment outlook as a cause for concern.
The government is set to unveil an industrial strategy aimed at decreasing energy costs but its publication has been delayed to late June.
Nevin suggested a slight recovery in output in the second quarter was not reflective of possible headwinds from “huge uncertainty in one of their major markets, a skills crisis and eye watering energy costs which are providing a harsh reality for many”.
“It’s absolutely essential that the forthcoming industrial strategy takes bold measures to bring down the cost of energy and takes equally radical action to ensure companies can access the people they need to take advantage of a more competitive landscape.”