Service: Deal Advisory 

Sector: Manufacturing 

Topic: Company news 

Industry Update: Manufacturing Report

24 May 2021

Following a volatile 2020 the UK manufacturing industry appears to be well placed for continued growth. Various favourable trends are driving strong interest in the sector.

The manufacturing sector is a mature segment in the UK economy, continuing to evolve and remain lucrative, attracting both local and offshore investors alike.  

The manufacturing industry has numerous sub sectors ranging from food and beverage, transport and automotive, and electronics to name but a few, and currently contributes c. 10% of all Gross Value Added (an economic productivity marker that measures contribution to the economy), employing c. 2.7m people. Industry revenues from 2015-2020 have remained buoyant at c. £400bn per annum.

The key takeaways from the report are: 

  • The Manufacturing industry is in recovery further to experiencing volatility in 2020, with recent economic indicators illustrating that activity in the sector is at its strongest seen since 1994. 
  • Thriving manufacturing industry sectors include the traditional industries such as food and beverage, transport and pharmaceuticals, with technology based nascent sectors (e.g. nanotechnology and biotechnology etc.), helping further drive growth.
  • Market trends shaping the industry - COVID-19 has made a significant impact on the pharmaceutical segment, with the formidable production of vaccines and the consumer emphasis on wellbeing and health, these trends are shaping the pharmaceutical sector and positively affecting the manufacturing sector.
  • Private investment is expected to further shape the sector over the next few years. Primarily fuelled by the recently announced Super Deduction Government Scheme, allowing businesses to reduce their tax bill by up to 25p per £1 spent on plant and machinery until 2023. Together with the further adoption of digital technologies post pandemic and the government’s commitment to achieving net-zero emissions by 2050 accentuating the need for energy and carbon intensive industries, manufacturing growth potential remains high.
  • The strong appetite for M&A in the manufacturing sector due to various driving factors.
  • Threats to the manufacturing sector include the longer-term ramifications of COVID-19 and the UK’s disorderly Brexit.
  • The manufacturing industry outlook is looking positive following the significant government support further to the COVID-19 pandemic and the continued investment into digital technologies and automation. This is set to lead the UK manufacturing sector into prolonged periods of growth.

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