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Manufacturing in the UK

Manufacturing has been, and continues to be, critical to the success of the UK economy. Britain’s strength as a prosperous trading nation over the past three centuries was built on manufacturing. Looking forward, a thriving modern manufacturing sector is central to the future success of the British economy.

The following provides a snapshot of the continued importance of UK manufacturing:

  • The UK is the world’s sixth largest manufacturer measured by output
  • £150 billion per annum to the economy
  • Half of UK exports
  • 50% productivity growth since 1997
  • 75% of business R&D
  • Consistently in top rankings of high tech exports
  • More foreign direct investment than any country apart from the USA

The UK outperforms every country in Europe in terms of attracting inward foreign direct investment to manufacturing, and is second globally only to the USA. In 2006, flows of manufacturing foreign direct investment into the UK exceeded £26 billion, compared to £15 billion into France and £3 billion into Germany.

Changes in the global economy present tremendous opportunities from new and growing markets. British manufacturing is well placed to succeed in the 21st century economy, with global connections providing ready access to global markets, a flexible labour force and light touch regulatory environment enabling quicker, and more informed responses to changing demand.

The changing role of UK manufacturers in global value chains indicates where the UK economy is developing new comparative advantages, and how this is affecting national economic performance.

Many new firms are part of a fragmented supply chain and do not produce final consumer products, while others have successfully combined manufacturing and service activities, with distinctions between the two increasingly blurred. Aerospace, automotive, pharmaceuticals, food and drink, defence, telecommunications and many more all have thriving manufacturing operations at their core, or are part of a global value chain with links to manufacturing elsewhere in the economy.

Manufacturing: Research - Design & development - Services - Sales & Marketing - Logistics & distribution - Fabrication

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In response, the Government has reviewed and strengthened its manufacturing strategy to focus support on helping manufacturers meet these challenges and seize the new opportunities they are creating. The new strategy sets out a framework that will inform a dynamic process of developing and implementing current and future policies and programmes for manufacturing.