The true impact of UK manufacturing
The size of the UK’s manufacturing sector is closely monitored in official statistics which track the sector’s direct contribution to the economy, for example in terms of GDP and employment. But such measures do not reflect the full impact of manufacturing on the UK economy, which extends far beyond these headline estimates.
The Manufacturing Technologies Association (MTA) asked Oxford Economics to investigate this, and to estimate the true impact of UK manufacturing. This request follows in the footsteps of the government’s 2016 Manufacturing Metrics Review, which highlighted the need for a more comprehensive approach to measuring manufacturing activity.
In response, this report uses an economic impact assessment to quantify the full contribution that the manufacturing sector makes to employment and GDP. Crucially, this includes the wider economic “footprint” supported by the industry’s domestic supply chains, together with the wage-financed consumption of its workers and those in its supply chain.
Bringing together these wider impacts of manufacturing, we estimate that the total impact of manufacturing on UK GDP was £446 billion in 2016. For every £1 million that the manufacturing sector contributes to UK GDP itself, a further £1.5 million is supported across the wider economy through indirect and induced multiplier effects. On the same basis, manufacturing supported a total of 7.4 million jobs in 2016. For each job in the manufacturing sector itself, a further 1.8 are supported in other sectors of the UK economy.
Andrew P. Goodwin
Director of Applied Economics, Europe & Middle EastEmail
Senior Economist, Economic ImpactEmail