United Kingdom: Manufacturing the Future is a Business Sweden report exploring the state of manufacturing in the UK and the opportunities that exist for Swedish manufacturing companies. The UK Motor Vehicle Manufacturing industry has been growing thanks to considerable success exporting cars to developing countries, and soaring domestic new car registrations supported by growing consumer confidence, cheap financing deals and rising disposable incomes. The industry is expected to grow by almost 4 percent in 2016-17, despite widespread uncertainty due to the result of the EU referendum. Commercial vehicles sales and demand from the EU have grown in the past year. Additionally, global oil prices dropped sharply, and consequently low fuel prices further encouraged demand. As a result, domestic new car registrations hit a record high in 2015. Demand for exports is expected to increase due to the falling value of the pound in 2016-17, and help stimulate revenue growth. Overall, exports are expected to continue growing in the coming years, supported by expectations of a weak pound and an improving global economy.
However, the falling value of the pound is also set to increase input costs and weigh on profit. Fuel-efficiency trends should support increased production, with more electric and petrol-electric hybrid car manufacturing expected to take place. Yet falling consumer and business confidence may constrain domestic demand and limit margins, while trade barriers could harm export demand in the long term. Advantages of maintaining a close commercial arrangement are clear for both the UK and EU, as over half of the cars produced in the UK are exported to the EU. Analysts do not see an immediate reversal of investment decisions already made, but decisions taken in the next 12 months will impact investments that will be made during 2018-2020.
This report is to provide an overview of the manufacturing industries in the United Kingdom, focusing primarily on the aerospace and automotive segments, in order to help Swedish manufacturing companies gain a better understanding of the opportunities in the UK and inspire them to initiate or continue their international expansion efforts.