British manufacturing could revive the UK economy?
The UK is now on the edge of the worst financial recession that most of us have experienced in our lifetime. It is not going to be easy to recover from the economic damage of the coronavirus. But it is going to be more difficult for the UK because of our economic imbalance.
The lockdown caused the majority of the economy to shut down. In the 1970s, nearly 33% of our GDP came from manufacturing but now it’s below 10%. Since the 1970’s the UK economy has slowly become deindustrialised. The majority of the UK’s GDP comes from the services industry.
However, to improve GDP you need to increase productivity which is much easier to achieve in the manufacturing industry than the services industry. This is because in the services industry you need to raise the number of customers to improve your productivity which may not be that easy during a financial recession. Whereas in manufacturing, improving productivity can be achieved by reviewing your workflow, updating processes and technology, and regularly training employees on using the equipment.
Further benefits that more manufacturing could offer include:
- More products to promote overseas
- Higher job security and higher salaries
- A reduction in the reliance on imported manufactured goods
The UK is currently promoting domestic manufacturing to overseas manufacturers, and are doing very well from this. However, it is going to very difficult to increase productiveness this way as providers will be relying on overseas manufacturers to increase their productivity. It is, therefore, going to be very difficult for the UK to increase its GDP this way.
To conclude, to improve the UK’s GDP in this financial recession we need to improve productivity. It is much easier to improve productivity in the manufacturing sector than in the services sector. Therefore, increasing the amount of productivity in manufacturing will help the UK out of the financial recession.
How we can help?
At Hawsons we have a dedicated team of manufacturing and engineering accountants at our offices in Sheffield, Doncaster, and Northampton. Our specialist team offers a wide range of services that are tailored to meet your individual needs. Our understanding of the issues faced by manufacturing and engineering businesses means that we can proactively seek out ways for you to maximise your profitability and minimise your tax liabilities.
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