Coronavirus: UK manufacturers urge national recovery plan as output plummets

Robots with car parts in car factory. Photo: Getty

Britain’s manufacturers are calling for a national recovery plan, including an immediate stimulus package, to boost investment and save jobs.

This comes on the back of a survey by Make UK, a representative for manufacturers, and accountancy and business advisory firm BDO, which shows that Q2 output in the manufacturing sector plunged to a record low amid the economic fallout from the coronavirus pandemic.

Make UK said the government should launch a stimulus package, beginning with a business rates holiday for manufacturers, similar to that granted to the retail sector earlier this year.

“Make UK believes this would be the single most important measure the chancellor could introduce having the quickest impact for companies of all sizes and across all sectors,” the organisation said in a statement.

This should be accompanied by other measures including a National Infrastructure Strategy to help supply chains, a car scrappage scheme and incentives to invest in digital transformation and productivity improvements.

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Tom Lawton, head of manufacturing at BDO said that “with COVID-19 causing instability in global supply chains and uncertainty surrounding our future trading relationships, the UK will become more reliant than ever on its manufacturing sector. Now is the time for the government to step up and show its support.”

According to the survey, output reached a record low of -56%, while both UK and export orders fell to -52%, comparable to the levels seen during the worst of the 2008 financial crisis.

Sectors linked to the automotive, aerospace and construction space were hit particularly badly.

Export orders turned negative last quarter for the first time since 2016, showing that demand in major markets was already slipping, a situation the COVID crisis exacerbated.

Make UK said the prospects for the next quarter appeared little better despite the easing of lockdown across Europe and Asia, with the forward looking indicator of output for the next three months at -42%.

As with the impact on output and orders, both employment and investment levels were cut back significantly.

Make UK is now forecasting that manufacturing will contract by almost 10% this year, before clawing some of it back in 2021 (+6.2%).

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