UK manufacturing sector slips to twelfth in world rankings

The figures are contained in Make UK’s annual ‘Manufacturing – The Facts’ report which contains data about the contribution of manufacturing to the economy including exports, sectoral breakdown, how the UK compares to other nations and salaries.

The data shows that in 2022 (the latest year for which global comparisons are available) UK manufacturing output was worth $259bn. This is behind Mexico (£316bn) in seventh place due to its existing manufacturing base and Chinese investments made in the first Trump Presidency to counter tariffs. Russia has climbed to eighth place ($287bn) due to substantially increased defence production, which is now worth six per cent of GDP. Both countries have moved ahead of Italy ($283bn) and France ($265bn) who have dropped in the world rankings to ninth and tenth respectively.

Taiwan has also edged ahead of the UK due to its global dominance of semiconductor manufacturing where demand has risen substantially.

China remains the largest manufacturing nation with output worth $5.06tn, followed by the United States $2.69tn and Japan $850bn. Germany remains the biggest European manufacturing nation ($751bn) and retains its position as the world’s fourth largest manufacturer, followed by India and South Korea in fifth and sixth respectively.

Make UK said the data reinforces the need for the UK to adopt a long-term industrial strategy. A report by Make UK in 2023 found that eight in ten manufacturers feel they are at a competitive disadvantage compared to other nations with industrial strategies.

In a statement, Verity Davidge, director of policy at Make UK, said: “There is no getting away from the fact it’s deeply disappointing to see the UK drop out of the world’s top ten manufacturing nations for the first time. However, this isn’t a reflection of any decline in UK industry but specific factors and trends which are redrawing the contours of the global economy. These trends reinforce the need for the UK to react with a long-term industrial strategy to take competitive advantage of our undoubted strengths. This will ensure the UK retains its place at the top table of advanced manufacturing where it has many world class sectors.”

The analysis of official data also shows that the United States remains the dominant export market for UK goods worth £60.1bn in 2022. Germany is the second highest destination (£33.bn) while The Netherlands is third (£31bn). However, Make UK cautioned that trade with the Netherlands could be inflated artificially by goods being routed through Rotterdam for onward travel to other destinations. Ireland is the fourth largest export market (£28.2bn).

Six of the top ten export markets are in the EU and worth approximately £150bn. According to Make UK, this highlights the continued importance of the EU for UK goods and the need for the new government to smooth out trade barriers.

Commenting, Dr Graham Hoare OBE, CEO at the Manufacturing Technology Centre (MTC), said: “This is a major body blow to UK manufacturing. We are home to some of the most innovative manufacturers and research facilities in the world. We must do everything possible to harness this expertise to reinvent ourselves as a manufacturing superpower.

“The government’s plans to change UK manufacturing’s fortunes through a new industrial strategy and key investments from the National Wealth Fund can’t come soon enough. But, as part of this, a major upskilling and reskilling programme will be critical. Without the right people with the right skills, we won't be able to hit productivity targets, even with the latest ideas, technology and funding in place.”

“The UK has huge potential to regain its position as a manufacturing superpower, if it harnesses the transformative power of the energy transition,” added Kelly Becker, president of UK and Ireland, Belgium and Netherlands at Schneider Electric. “This needs to be a key part of the forthcoming Industrial Strategy which should assess and support the manufacturing and uptake of solutions that contribute to the decarbonisation and digital transformation of the UK economy and infrastructure.”