Manufacturing performance improves despite raft of challenges

Charlotte Horobin

The manufacturing sector remains integral to the success of the East Midlands economy, according to a new report published today (18 July) – with manufacturers in the region doing a good job of adapting to new post-Brexit rules.

The report by Make UK and BDO LLP reveals that the sector accounted for 16.3% of the region’s economy in the year to June 2022, an increase from 15.9% in 2021.

Manufacturing growth in the region has picked up strongly due to the importance of the food and drink sector, which has been driving the region’s performance since the hospitality and retail sectors fully re-opened in the first half of the year.

In addition, both investment and job prospects have improved significantly since the turn of the year as firms hire to meet increased demand.

Three subsectors account for almost half of manufacturing output in the East Midlands. Food and drink remains the biggest manufacturing sector in the region accounting for almost a quarter of output (22.2%), followed by transport equipment (13.8%) and fabricated metals (10.5%).

The report also reveals the region to be a strong export performer, accounting for 6% of total UK manufacturing exports. Over half of its exports are to the EU.

Charlotte Horobin, region director for Make UK in the Midlands, said: “Despite the talk of ‘Global Britain’ history shows that geography is always the main determinant of trade.

“The EU was always going to remain the main destination for manufacturers in the East Midlands who appear to becoming more, not less, dependent on it as a market.

“As a result, it is vital the Government now takes steps to reset the trading relationship with the bloc and, wherever possible, eases and simplifies trading to boost exports for SMEs in particular.”

Jon Gilpin, head of manufacturing at BDO in the Midlands, added: “Manufacturers across the region support hundreds of thousands of jobs and make a significant contribution to the local economy.

“The increasing dependence on EU export markets shows that local businesses have done a good job in adapting to new post-Brexit rules, but ongoing Government support may well be required, particularly for firms at the smaller end of the spectrum.

“It’s vitally important for the region’s exporters that good trading relationships with our European neighbours are maintained to ensure that trade remains as frictionless as possible. We also hope to see further progress on free trade deals which could offer new and exciting opportunities for East Midlands businesses.”