UK manufacturing has relatively declined since the 1960s. As a part of the GDP, it has fallen 18% from 1970 to 2010.

Real industrial output in the UK increased 40% from 1970 to 2000. Manufacturing in the UK accounted for 8.2% of the workforce and 12% of the national output in 2010. 25% of the UK’s manufacturing exports are high tech goods; there has been strong growth in high tech industries such as car production, aerospace and nuclear technology, but has seen a strong decline in the clothing and textile industry.

Industrial output growth was weak in the UK overall to relative economy during a period known as the great moderation, a period of economic balance with low inflation, positive economic growth and a belief that the boom and bust cycle of the economy had been overcome. This happened between 1997 and 2007. The manufacturing output (not including mining and primary industries) showed low growth, even though overall growth was still positive; it was failing relative to the growth of the GDP.

In reality, manufacturing in the UK has been in a ‘relative’ decline since the 60s. The percentage of manpower involved in industrial production has undergone a steady decline from having 25% of jobs in manufacturing in 1980 to 8.2% in 2010.

One of the reasons for the decline in UK manufacturing were wages in other sectors rose, leading to percentage of manpower in other more high tech sectors being increased. Relative wage costs and the relative productivity of a country’s manufacturing are also important; the UK failed to keep up with the low wage-cost economies of the world, like China. Since manufacturing is led by exports, changes in the Pound can highly affect the sector. During the periods of the time the Pound was strong, the manufacturing sector struggled like the early 1980s and 2000s. A strong Pound held back the growth of manufacturing, even though it may not contribute to long-term decline and simply temporary busts. Another reason is recessions; a concern is that a deep recession can lead to a “permanent loss of output” even with top firms struggling. A consequence that relative decline in manufacturing in the UK was the impact on the UK account deficit.

The government in 1970s UK was more involved and tried to help failing industries with subsidies, which in the end was considered a failure; ergo, since the 1980s the government has been very minimalistic when it comes to subsidies. The labour force was a heavy factor in the decline of the manufacturing sector, as mentioned before; it has been argued before that the UK placed more value on academic degrees rather than engineering skills which had a stronger benefit to the industrial sector. The British macroeconomic policy has also been heavily scrutinised, with claims being made that it relies “too heavily on consumer spending to power economic growth”, therefore causing a low savings rate. This and being reliant on spending has led to low levels of business investment.

Economics Help, Pettinger, Tejvan “Relative decline in UK manufacturing”, Date retrieved October 6 2018 https://www.economicshelp.org/blog/7617/economics/economic-growth-during-great-moderation/