UK manufacturing thrives in uncertain climate

By James Ridler contact

- Last updated on GMT

Despite the uncertain political and economical climate, UK food manufacturing still continues to grow
Despite the uncertain political and economical climate, UK food manufacturing still continues to grow

Related tags: Finance

The UK food and drink manufacturing sector continues to buck the curve and report growth, despite the threat of an uncertain political and economic climate, according to a new report.

Research by Make UK and Santander found that food and drink remained the largest manufacturing sector in the UK, worth 15.9% of total manufacturing GVA [gross value added] with sales of £85.6bn in 2018 – up 7.6% since 2016. As a result, the sector now employs about 440,000 people, up 5.3% since 2016 and at its highest level in 15 years.

Sales overseas have fuelled this growth, up just under a quarter in the last two years. The EU remained the biggest market, accounting for just under two-thirds (61%) of exports, worth £13.9bn.

Ireland was the single largest destination for exported goods – 21.4%, worth £4.2bn – followed by The Netherlands, France, the US and Germany. Sales to Asia and Oceania saw significant growth, up 295% in the last 20 years.

Imports greater than exports

Despite this, the UK still imported more food than it exported – £46bn and £23bn respectively – and was the fourth-largest food importer in the world. This reliance on imported goods highlighted the critical need to avoid border and customs checks on fresh food coming into the UK post-Brexit.

Comment on the findings, Make UK chief economist Seamus Nevin said: “Despite the economic and political uncertainty the sector seems to be shielded from the difficulties experienced elsewhere and is driving hard for growth in the UK and overseas.

“Despite growth in the rest of the world, however, the EU remains the dominant market for exports of food and drink. As such, it is vital that frictionless trade continues in any post-Brexit agreement if the remarkable growth pattern of the sector is to be maintained.”

Growth of online shopping

The report also found that consumers were increasingly turning to online services to buy their food and now accounted for 7% of total sales, worth £141.9m a week. This was ahead of France (5.5% of sales) and the Czech Republic (3.2%).

Santander UK head of food and drink Andrew Williams added: “Today’s data gives food for thought on the importance of this sector to the UK economy which, despite uncertainties in the UK and internationally, has remained resilient.”

Meanwhile, export opportunities, the rise of automation and the challenges surrounding sustainable packaging for food and drink manufacturers have all been highlighted in a new industry report.

Related topics: Brexit, Operations

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