UK overtakes France as eighth largest manufacturer as Badenoch celebrates one year in trade role

Mon 11 Sept 2023
Posted by: William Barns-Graham
Trade News

Manufacturing worker in a factory

Having celebrated her first year as trade minister over the weekend, Kemi Badenoch will be further heartened by reports that the UK has overtaken France as the world’s eighth largest manufacturer, as well as BMW’s decision to invest in the production of electric Mini Cooper cars in Oxford.

The news that the UK has leapfrogged France comes from analysis of official data by trade association Make UK.

Although the UK slipped behind France in the rankings in 2018, Make UK’s ‘Manufacturing – The Facts’ report finds that in 2021 – the last year for which global comparisons are available – UK output climbed to US$272bn, ahead of France’s $262bn.

UK manufacturing was valued at £224bn in 2022, according to separate Office for National Statistics (ONS) data.

Global picture

Within Europe, the UK remains behind Germany and Italy, which are the world’s fourth and seventh largest manufacturers.

China remains top of the rankings, with output valued at $4.9trn, according to the Manufacturer. The US follows in second place ($2.5trn) with Japan in third ($995bn).

Italy in UK’s sights

2021 was the third year since 2002 in which the UK has come ahead of France.

The British government has set its sights on a target of getting manufacturing output to represent 15% of total UK GDP. If it succeeds in this, the UK could also overtake Italy, according to Make UK’s analysis.

Exports data

Make UK’s report finds that the US is the largest export market for the UK for manufactured goods, valued at £56.7bn in 2022. The Netherlands has overtaken Germany to become the second largest market, valued at £37bn.

However, Make UK has cautioned that the export figures for the Netherlands could be artificially inflated by trade flows being routed through the port of Rotterdam before onward travel into the UK, according to Plant & Works Engineering.

BMW boost

In further good news for UK business, BMW is set to announce that it will invest £600m to upgrade its Oxford factory for the production of electric Mini Cooper cars, reports the FT.

The investment will be supported by £75m in taxpayer funds and is seen by the government as a vote in confidence in the UK economy. The decision is “another shining example of how the UK is the best place to build cars of the future,” prime minister Rishi Sunak has said.

The news marks a U-turn form the German automotive giant. It had previously said it would cease producing electric vehicles in Cowley near Oxford, leaving the factory there reliant on the production of petrol cars. BMW has committed to phasing out petrol car production by 2030.

The automotive industry continues to press the UK and EU to negotiate an easement on electric vehicle tariffs, with new rules of origin requirements set to be introduced from the start of next year, under the Trade and Cooperation Agreement.

Badenoch’s first year

Trade and business minister Kemi Badenoch was already in celebratory mood at the weekend, posting on LinkedIn about her achievements one year on since taking on the trade portfolio in government.

Badenoch added business to trade following the merger of the trade and business departments in Sunak’s cabinet reshuffle in February.

She includes the implementation of free trade agreements with Australia and New Zealand among her achievements, alongside the deal for the UK to join the 11-nation Pacific rim trade bloc, CPTPP.

“We’re making strong progress,” she wrote. “The UK is ranked as the fifth largest exporter of goods and services, up from sixth before I took office. The value of our export wins rose by 13.4% in 2022-23 to £19.6bn.”

Challenges ahead

Despite this, Badenoch continues to navigate a changing and increasingly uncertain landscape in global trade.

Doing the media rounds this morning (11 September), following the G20 summit which took place in Delhi over the weekend, she responded to questions about rising tensions between the UK and China. Amid calls from hawkish Tory MPs for the UK to designate China as a ‘threat’, Badenoch told Sky News:

“China is a country that we do a lot of business with. China is a country that is significant in terms of world economics. It sits on the UN security council. We certainly should not be describing China as a foe but we can describe it as a challenge … I don’t think we should be careless in terms of how we speak about other countries when these sorts of things happen.”

The media’s questions about China came amid reports that a Parliamentary researcher, linked to the Conservative Party, has been arrested for espionage.