The UK already has a clear competitive edge in making one in three key products needed for a future green economy, a new report has found and it urges the government to use this ‘comparative advantage’ to reverse years of manufacturing decline.
The report from the Think Tank IPPR identifies which growth industries the UK should focus on as part of a “pathfinding strategy” to build new economic and manufacturing strength in a net zero world. Its call has been backed by leading employers’ organisations MakeUK and the CBI.
Researchers used new analysis to determine specific areas of existing UK manufacturing expertise that they say should be used as a launchpad for green industrial growth – and also those that the UK is well-placed to exploit in future.
Among the green products most needed for a net zero economy, it focusses on those for which there is not enough domestic or global supply; those where the UK already has manufacturing advantages; and those to which the UK could most readily pivot, adapting from existing industries and building on existing skills.
Contrary to popular belief, the report finds that the UK has a current competitive edge in making a third of the 143 productsneeded in technologies to deliver net zero.
These include products for monitoring, measuring and analysing, all crucial for the electricity grid, renewable energy generation and decarbonising industry. The UK is also strong at making electric trains and their parts, heat pump components, and turbines for geothermal or hydro electricity generation.
It uses a novel approach to identify further green industries in which the UK is best suited to specialise in future. These strategic priorities include manufacturing wind turbines, all kinds of green transport (including electric vehicles and the zero-emissions planes of the future), and heat pumps.
The strengths identified by IPPR are spread widely across Great Britain. The North and the Midlands are particularly well-placed to develop all three of these, while other areas including some coastal districts, the South East and part of Scotland and Wales have potential strengths in one or two (see maps in Notes below for detailed areas)
The report says the right ‘pathfinding’ approach to developing new industries will deliver on three key objectives for the UK: a more dynamic and competitive economy, more economic opportunities in industrial areas, and less exposure to the risk of disruption in international trade and supply chains.
It reveals a series of metrics on which the UK has fallen behind key global competitors, but which could be reversed
Over the past 30 years the UK has lost over a third of its manufacturing strengths, an “exceptional decline” even compared to other advanced economies that have deindustrialised, like the USA or France, leaving its industries less diverse and less technologically advanced
The UK’s share of the world’s green product exports has halved since the 1990s
While the number of different goods the UK has a competitive edge in exporting has shrunk by a third since the mid-1990s, the average G7 country has added 6 per cent more to theirs.
IPPR also urges policymakers to consider how to retain and rebuild some of the heavy ‘foundational’ industries – including steel – that are essential for the resilience of the UK economy, and are strategically crucial in an increasingly volatile world.
It says that over-concentration of manufacturing in China, notably solar panels, puts the UK and the world’s green transition at risk.
The report points out that jobs in the net zero economy tend to be significantly more productive, paying on average £10,000 more per year than the national average salary.
Dr George Dibb, head of IPPR’s Centre for Economic Justice, said:
“The UK faces three generational challenges: to deliver net zero, to level up and reinvigorate our economy, and to become more resilient to future shocks. These challenges have a common solution – seizing the growth opportunities of green manufacturing.
“Over the past 30 years we have slipped sharply behind our global competitors in the quantity and kinds of things we actually make. That’s bad for jobs, for living standards, for our security – and for our long-term economic strength as a country.
“Yet UK manufacturers still have a competitive edge in making some of the products vital for a net zero economy, and with the right government support we have the potential to be world-leading in many more. Our report has identified what we should target to develop in the near future; now we need government to adopt a long-term strategy that will lead us along this path.”
