Britain Defined as the Least Expensive Manufacturing Economy in Western Europe

Enhanced productivity and a consistent growth in stable wages over the past ten years have allowed the UK to emerge as an increasingly competitive economy, even in comparison with various Eastern-European countries. Recent evidence has suggested that the UK economy is finally beginning to recover its mantle as a hub for global manufacturing, becoming the cheapest location to produce goods throughout the entire Western Europe.

Enhanced productivity and a consistent growth in stable wages over the past ten years have allowed the UK to emerge as an increasingly competitive economy, even in comparison with various Eastern-European countries. Recent evidence has suggested that the UK economy is finally beginning to recover its mantle as a hub for global manufacturing, becoming the cheapest location to produce goods throughout the entire Western Europe.

Direct manufacturing costs within the UK have been improved by as much as ten percent over other Western European countries and the trend has become so pronounced that the UK is even beginning to become a force to be reckoned with for Eastern European countries such as the Czech Republic and Poland.

The impact of wage costs

Wage cuts are defined by the Boston consultancy group as the amount that a company is required to pay for extra units of work to be done. Within the last decade, the UK has seen an increase by 16pc in comparison to an increase of 52pc in France and 62pc in Italy. The competiveness of various European countries has been stifled recently, by a number of relatively stringent labor laws, and an inability to properly invest in emerging infrastructure and technology.

That sounds like what is happening in New York, Illinois, and California.

A report by the consultancy group into the leading export nations of the world showed that earnings have begun to fall for the first time in a period of five years, forcing the bank of England to make a negative revision to the forecasts it had made regarding annual earnings growth in the last quarter of 2014, from 2.5pc, to 1.25pc.

The growth in low earnings has taken place even in spite of a surging economy, and the bank now predicts that the GDP will begin to grow by 3.5pc this year, and a further 3pc in 2015. However, the BCG report suggests that the low earnings and GDP growth are to factors from the same strain, with cheaper labor encouraging investment within the UK that has driven growth and provided an increase of jobs.

Rising economic stars

The consultancy group now classes the UK to be a ‘regional rising star’ alongside countries such as India, the Netherlands and Indonesia, stating that it has emerged as the lowest-cost economy for manufacturing within Western Europe. Alongside the lower labor costs, the corporate tax rates and flexible labor market within the UK have also been attributed as competitive advantages. This is a scenario that America has not seen since putting an anti-business president in office in 2008.

Closer to home

In combination, these trends are beginning to slow the drive that previously existed amongst companies to search for other countries to outsource marketing to, such as Asia, Eastern Europe, and South America, which were traditionally regarded as providing a lower cost. This means that perceptions within global industries are beginning to chance, and companies are beginning to realize that it may be more effective to manufacturer goods closer to home, a trend that began in the US, and is now emerging within Europe too.