Britain’s manufacturers are accelerating as growth prospects become significantly more positive for the rest of the year, according to a major survey published by Make UK and business advisory firm BDO.
Having seen a brutal 10% decline in output in 2020, the sector is now set to recover a significant amount of that loss in 2021 and outpace the growth of the economy overall. This growth is based on a surge in both domestic and overseas orders which is translating into strong hiring intentions.
Investment intentions have also turned positive for the first since the first quarter of 2020, suggesting that the introduction of the temporary super-deduction tax’ in the Budget is having some impact together with improved growth prospects.
However, Make UK stressed that the figures are reflecting a recovery from a very low base with balances last year reaching record lows worse than those seen during the financial crisis. Between 2019 and 2020 the manufacturing sector lost approximately £18bn in value which will take more than a short-term boost of pent-up demand to return the sector to its pre-pandemic size.
Yet, Make UK forecasts do suggest, assuming vaccine effectiveness is strong, that manufacturing output levels will return to pre-pandemic levels by the end of 2022. That is earlier than previous forecasts had suggested.