UK manufacturers are looking forward to a good second half of 2024 as orders and output are expected to rise. Despite the challenges of a skills shortage, the sector is upbeat about its prospects. According to a recent Make UK survey, the trade body for manufacturing, manufacturers think their sector will outperform the rest of the economy.
Why are manufacturers feeling confident?
There are several reasons why UK manufacturers are feeling optimistic. Firstly, the sector is getting back to normal business after a period of extreme disruption. The pandemic caused wild demand swings, the Russian invasion of Ukraine and supply chain blockages (for example, at the Suez Canal) caused price and material volatility. Now as those issues settle down, manufacturers are finding a more stable and conducive environment to grow.
The Make UK survey of 320 companies shows that the proportion of manufacturers reporting an improvement in their order books has doubled in the past three months. This growth is largely driven by strong export demand, particularly from the US which is offsetting the slower domestic market. Furthermore, with inflation cooling and possible interest rate cuts on the horizon, business confidence is at a decade high.
Make UK says the sector will grow 1.2% in 2024, ahead of the 0.9% GDP growth for the same period. This is a sign of the sector’s resilience.
Skills shortage will be the Challenge
While the forecast is good the sector and confidence is high, the sector still has some difficult challenges to face. At the forefront of these challenges is the shortage of skilled workers. This could potentially prevent manufacturers from exploiting growth. The skills gap has been a long term issue, made worse by demographic changes, technological changes and lack of investment in training and education.
Manufacturers are calling for the government to address these skills shortage. The sector’s growth depends on having a workforce that can meet the demands of modern manufacturing. Without targeted interventions like vocational training programmes, apprenticeship incentives and industry/education partnerships, the sector’s growth will be stifled.
Conclusion
To conclude, while UK manufacturers are looking forward to a good second half of 2024 driven by improving order books and export demand, the sector’s ability to fully deliver will depend on the skills shortage being addressed. The government’s role in solving this challenge will be crucial for the sector’s growth and long term success.
How can we help?
Hawsons has a dedicated team of specialist manufacturing and engineering accountants in Sheffield, Doncaster and Northampton.
Our specialist team offers a wide range of services which are tailored to meet your individual needs. Our understanding of the issues faced by the manufacturing and engineering businesses means that we can proactively seek out ways for you to maximise your profitability and minimise your tax liabilities.
Craig Burton
Partner, Sheffield
Free initial meeting
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