A new report from Make UK, the manufacturers’ organisation, and accountancy and business advisory firm BDO LLP shows that manufacturing remains central to the success of the East Midlands, with the sector accounting for 16.3% of the region’s economy (an increase from 15.9% in the year to June 2021), way above the national average of 10%.
According to the report, which analyses the overall status of industry in the region over the last twelve months, the East Midlands was initially slower than other UK regions to begin recovery due to the exposure of the region to the automotive and aerospace sectors.
However, growth in the region is now picking up strongly due to the importance of the food and drink sector (the second largest in the UK), which has been driving the region’s performance as 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 regional manufacturing output. 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 East Midlands also continues to be a strong export performer, accounting for 6% of total UK manufacturing exports. The EU is the region’s main export destination where its dependence has increased (51% from 48%) followed by Asia & Oceania, which at 22% is a significantly higher exposure than other UK regions. North America is the third largest market, accounting for 14% of the region’s exports.
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.”
