Make UK / BDO: South East manufacturers forecast exceptional growth

According to a major survey published by Make UK and business advisory firm BDO, South East manufacturers are seeing strong growth prospects as economies continue to open up and the economic recovery strengthens.

Having seen a sharp 10% decline in output in 2020, the sector in the UK overall is now set to recover a significant amount of that loss in 2021, with forecasts suggesting it will have recovered the total loss from last year by the end of 2022. However, Make UK added that the supply chain disruption and some labour shortages could hamper this improving picture in the final quarter of the year.

Particularly, both UK orders and total orders were very strong for South East manufacturers with a total order balance of +63%, which is exceptional by historical standards. Additionally, output improved to a level above the UK average, with the business confidence indicator the highest of any UK region.

As a consequence of the strong growth prospects and increased business confidence, investment intentions have also increased substantially to a balance of +51%, the highest of any UK region, while companies stepped up recruitment to meet demand.

According to Make UK, the South East would also have been boosted by the continuing demand for electronic goods and components given the strength of the sector in the region, as well as the recovery in hospitality (food and drink is the second strongest sector in London and the South East).

Make UK is predicting growth for the sector of +7.1% in 2021, tailing off slightly to +4.4% in 2022. If these predictions are met, the sector will have recovered all the lost output from 2020.

"Manufacturers have proved their resilience over and over again. But we know big challenges remain that will continue to stress-test South East makers for the remainder of the year. However, such impressive order and output balances are having a hugely positive impact on investment and employment intentions. The investment boost we have witnessed is indicative of an industry that is confident of a future worth investing in."

Mark Hutton, Head of Manufacturing for BDO in the South East.

Region Director for Make UK in the South East, Jim Davison said: "South East companies are seeing buoyant growth conditions as prospects continue to accelerate for manufacturers as economies at home and abroad continue to open up. However, supply chain shortages and the rapidly escalating increase in shipping costs are threatening to put roadblocks on the road to faster growth despite the current optimism.”

About Make UK

Make UK, the manufacturers’ organisation, is the representative voice of UK manufacturing, with offices in London, Brussels, every English region and Wales. Collectively, it represents 20,000 companies of all sizes, from start-ups to multinationals, across engineering, manufacturing, technology and the wider industrial sector. Make UK directly represents over 5,000 businesses who are its members.

About BDO LLP

Accountancy and business advisory firm BDO LLP provides integrated advice and solutions, and operates in 17 locations across the UK, employing 5,500 people offering tax, audit and assurance, and a range of advisory services. BDO LLP is the UK member firm of the BDO International network, which provides business advisory services in 167 countries, with 88,000 people working out of 1,800 offices worldwide, and revenues of $9.6bn.