The UK manufacturing industry has experienced continued post-pandemic growth in the second quarter of 2023, but still faces a challenging year ahead, according to the latest quarterly Make UK/BDO survey on state of the sector.
The research predicts that the industry will shrink by 0.3% in 2023. However, this is an improvement on the Q1 prediction of a -3.3% contraction and the -4.4% forecast made at the end of 2022.
The results are being attributed to a continued recovery in the aerospace sector, driven by new orders for aircraft over the last year.
According to The Times, aerospace company Airbus has promised the UK’s first new helicopter factory in decades if they win a Ministry of Defence contract to replace the fleet of Puma vehicles currently used by the armed forces.
The electronics industry also enjoyed a good quarter, boosted by firms investing more in digitisation.
‘Gradual’ improvement
James Brougham, senior economist at Make UK, said: “Manufacturers are seeing a gradually improving picture but the word ‘gradually’ is doing a lot of heavy lifting.”
He pointed out that the UK still lacked a broader industrial strategy and faced ‘anaemic’ growth as a result.
Richard Austin, BDO’s national head of manufacturing, warned of “longer-term systemic challenges” facing the UK market.
Supply chain pressures
He said: “Supply chain pressures, for example, are an endemic issue for the businesses we talk to, particularly medium-sized firms. They are facing continued disruption and increased costs, at home and abroad, with many choosing to onshore operations but facing major barriers in doing so.
“These issues cannot be overlooked by policymakers or we run the risk of tepid-at-best growth for UK manufacturing while neighbouring countries outpace us.”
UK orders fell slightly to +15%, down from +20% in Q1, but are expected to pick up again in Q3 to +21%.
On the wider economy, Make UK estimates that the nation’s GDP growth will be 0.4% for 2023 and 1.3% in 2024.