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Coronavirus to hit UK manufacturing growth until 2022

Saleha Riaz
·3-min read
Worker building a satellite dish. Photo: Getty
Worker building a satellite dish. Photo: Getty

The coronavirus pandemic is going to hit UK manufacturing growth until 2022, according to a report by manufacturer lobby group Make UK and bank Santander UK.

The study, which also noted the importance of green initiatives, stated that the effects from COVID-19 could cost the sector a potential £35.7bn ($46.3bn) in Gross Added Value this year alone as output falls to an all-time low.

But while a majority businesses across the industry have been pummelled by the effects the coronavirus pandemic, there are some bright spots for manufacturers — those responding to the crisis by making medicines, sanitisers, ventilators, and Personal Protective Equipment (PPE).

“Different parts of the economy, as well as different regions, will recover at different speeds, with export demands, consumer tastes, and business models changing to the ‘new normal’,” the report said.

“This is why it is vital for government to boost economic confidence and deliver shared prosperity, and for manufacturers to implement best practice and build resilience.”

READ MORE: UK car production still at lowest levels since end of WWII

The report predicts the sector will be at the forefront of helping the UK meet its net zero carbon target through investing in green, sustainable processes and maximising the use of digital technologies.

“A new digital, greener and more sustainable economy will emerge from this with an opportunity to catapult manufacturing, science and engineering once again to centre stage in the UK. Industry stands ready to work with government to produce a new industrial vision which will benefit all regions of the UK,” said Make UK CEO Stephen Phipson.

Meanwhile Paul Brooks, head of manufacturing at Santander, said new overseas markets “will be crucial to diversify and minimise over reliance on a single export market for UK manufactured products.”

The report also looked at the impact of the disruption to supply chains and logistics management. It reveals the extent of dependence on China and said there is a desire to mitigate risk and build resilience by reviewing supply chains.

More than half of companies (53%) are already reviewing them and a further third committed to doing so in the next year.

READ MORE: Coronavirus: IMF warns UK economy will shrink 10.2% this year

This shift will be vital in helping government with its exercise to map out supply chains and understand critical sectors and components which will be needed to build greater resilience into the economy overall, according to the report.

The study said the industry must embrace the need for digital skills that can support the adoption of technology and the way it is deployed to rethink existing systems and processes, especially with the use of green and sustainable technologies.

“This must be a national strategic priority with the creation of a National Skills Task Force,” it said.

It recommends that the government encourage manufacturers to lead the green revolution by making grant schemes simpler, fewer and more accessible for SMEs so that more take the leap to invest in green solutions.