All English regions and the three devolved nations have seen manufacturing output rise back above 2019 levels for the first time, according to a report from Make UK.

Make UK, which represents UK manufacturers, and accountancy and business advisory firm BDO have published their annual Regional manufacturing outlook report. It marks the 11th annual review of manufacturing activity across UK regions and nations.

The standout takeaway from the report, based on the latest data on output to the end of 2023, is that all regions are back above 2019 levels. 

The South West is the strongest performing region with output more than a quarter (27%) above 2019 levels. This was followed by the East of England (21%) and the North West, which had output up by a fifth.

According to the report, this is likely to have been driven by a surge in spending by the aerospace and defence sectors.

Output in the North West is likely to have been aided by increased production in the automotive sector following the post-Covid-19 slump.

Fhaheen Khan, senior economist at Make UK, said: “It has taken some time, and some regions are striking forward at a faster rate than others, but hopefully the post-Covid malaise is now firmly in the rear-view mirror.”

Richard Austin, head of manufacturing at BDO, said: “The impact of the pandemic on the manufacturing sector can’t be understated. Having battled grounded flights, reduced demand and disrupted supply chains, to see manufacturing bounce back with such renewed force is a testament to the industry’s resilience and the strength of the regions they are working in.” 

The last year has been challenging for the manufacturing sector, with business costs increasing as a result of Chancellor Rachel Reeves’ Autumn Budget. This raised both the National Minimum Wage and employers’ National Insurance contributions. 

There was also the return of Donald Trump as US President and his introduction in April of sweeping import tariffs on all goods entering the US, including a 25% levy on imported cars and a 25% tariff on all imported steel.  

A ‘historic’ US-UK trade deal was struck in May that saw tariffs on UK car and steel imports slashed. The agreement includes a reduction in car tariffs from 27.5% to 10% on the first 100,000 cars exported to the US.

The 10% baseline tariff remains in place on the vast majority of goods imported from the UK – including manufactured goods – unless covered by other specific tariffs or exemptions.

The report shows that there is likely to be a diverging impact of US tariffs across all regions and nations, with some more heavily exposed to the US market than others. 

The West Midlands has the strongest exposure, with automotive exports accounting for a large part of the 26% of West Midlands exports destined for the US. 

The East of England (22%) and London and the South East (18%) also have a proportionately larger share of their exports going to the US than other English regions and devolved nations.

Furthermore, the report also shows a continued decline in exports to the EU for all English regions and nations. Wales remains the most dependent on the EU, with almost two-thirds (61%) of Welsh goods destined for the bloc. However, this figure represents a decline of around 10% since 2020 when approximately three-quarters of Welsh exports went to the EU.

The report finds that overall, despite the impact of economic disruption, UK manufacturers across the nation are doing well and are positively looking towards the future. As highlighted in a report last year, manufacturers are focusing on the actions that will make a difference, such as investing in sustainability and digital solutions including AI and upskilling the future workforce.

In good news, the survey showed that the number of manufacturing jobs increased by 12,000 in the twelve months to March 2024. 

This brings the total number of jobs in the sector to just under 2.6 million. 

More positive news highlighted in the report is the recent launch of the Industrial Strategy. Published on 23 June, the government’s strategy is a 10-year plan intended to increase business investment and drive growth in the UK economy. 

The long-term plan sets out how the government plans to invest in eight key sectors deemed to have the highest potential for economic growth. These will receive the bulk of government industrial support, whether that be through cheaper energy prices, trade support or skills training.

The report welcomes this strategy and says that “now is the time to put this plan into action and, if done well, industry will back it wholeheartedly through proactive investment in our future”.

Austin added that while the industrial strategy is a good start, sectors across the UK will need “continued investment in design, innovation and skills across the whole of the country if they’re to weather global trade disruption”.