The United Kingdom year-end review 2024: Navigating the low phase

Manufacturing Output

The results of third quarter Manufacturing Outlook Survey were released in September. Published by Make UK, the survey represented 307 UK manufacturers. Fifty-eight per cent of the surveyed companies believe that the change in government would lead to better economic growth overall in the next 12 months, and only 6 per cent expects GDP in 2024 to decline. This prompted Make UK to upgrade its forecast for 2025 from 0.8 per cent to 1.8 per cent. Make UK – a UK manufacturers’ organisation, projected manufacturing growth of 0.5 per cent in 2024 and 0.8 per cent in 2025, downgrading from 1.2 per cent forecast in the previous quarter due to revisions by the Office of National Statistics (ONS). GDP is forecast to grow by 1.1 per cent and 1.8 per cent in 2024 and 2025 respectively. In this, the manufacturing output of the UK textile sector is expected to drop 7.7 per cent and 2.9 per cent in 2024 and 2025.

Second Quarter Trade

The UK’s imports of clothing amounted to £1.188 billion (~$1.56 billion) in July, reducing 4.5 per cent from £1.244 billion in July 2023 despite registering an increase over £1.099 billion in June 2024. During the same month, textile imports increased 1.69 per cent to £479 million (~$616 million) y-o-y, and also grew from June’s figure of £471 million. Meanwhile, fibre imports reached £35 million versus £34 million of last year, also surpassing £30 million in June 2024.

For the second quarter, clothing imports dropped 5.75 per cent to £3.485 billion (~$4.53 billion) from £3.698 billion in Q2, FY23. The imports in the first quarter of 2024 stood at £3.278 billion. In April to June quarter, fabric imports amounted to £1.382 billion and textile fibres stood at £107 million against previous year’s £1.439 billion and £108 million respectively.

The export performance in the month of July 2024 included clothing export of £259 million against £293 million in July 2023 and £297 million in June 2024; textile fabric export of £222 million versus £221 million last year and £243 million in June 2024; and fibre export of £68 million, up from £50 million. During the quarter, clothing exports totalled £837 million (£897 million in 2023 and £832 million in Q1, FY24), while textile fabric and fibres amounted to £712 million and £172 million respectively.

Consumer Price Index (CPI)

The ONS released CPI data in mid-August, according to which UK’s CPI rose 2.2 per cent in the 12 months ending in July 2024, up from 2 per cent in June. However, on a monthly basis, CPI fell 0.2 per cent in July compared with a fall of 0.4 per cent in July 2023. The data also revealed that core CPI, excluding energy, food, alcohol and tobacco, increased 3.3 per cent in the same 12 month-period but was down from 3.5 per cent in June. The CPI goods annual rate improved from (-)1.4 per cent to (-)0.6 per cent. Meanwhile, the CPI for clothing and footwear rose 2.1 per cent in the 12 months to July 2024, staying up from 1.6 per cent in June. On a monthly basis, this index fell 1.7 per cent in July, compared with a fall of 2.2 per cent in July last year.

Employment Situation

UK employment and unemployment rate for the May-July period in 2024 were 74.8 per cent and 4.1 per cent respectively. Both were below estimates for the same period in 2023. The ONS release mentioned the country’s economic inactivity rate at 21.9 per cent, above estimates of the year-ago, for the same period. It decreased across all age groups between 16 and 64 years. Total actual weekly hours worked during the period increased to 1.06 billion hours, also above prior year levels, driven largely because of increase in women’s working hours. The number of those unemployed for up to 12 months decreased, dropping below the previous year’s levels. This number also decreased in the quarter but remained above estimates for the year-ago period. Estimates for payrolled employees in the UK decreased by 6,000 between June and July but rose by 203,000 (0.7 per cent) between July 2023 and July 2024.

Employment Rights Bill

The Employment Rights Bill was introduced on October 10, 2024, within 100 days of the new government coming to the office after elections in July. The bill aims to help deliver economic security and growth to businesses, workers and communities across the UK. The bill removed the existing two-year qualifying period for protections from unfair dismissal, allowing all workers to have protections from the day one on the job. The government will also consult on a new statutory probation period for new hires in the companies, in order to allow for a proper assessment of an employee’s suitability to a role. The emphasis is on giving more people confidence to re-enter the job market or change careers, and eventually get the labour market moving again as jobs are essential to UK’s economic growth. The data says that one in five UK businesses with more than 10 employees complain of staff shortages.

The bill encompasses 28 individual employment reforms, including the strengthening of the statutory sick pay by removing the lower earnings limit for all workers and cutting out the waiting period before sick pay kicks in. Wherever practical, the flexible working will be enforced to make workplace more compatible with people’s lives. Large companies will be required to address gender pay gaps, support employees through the menopause, and ensure protections against dismissal of pregnant women and new mothers.

A new Fair Work Agency, bringing together existing enforcement bodies, will also be established. The agency will enforce rights such as holiday pay and also support employers looking for guidance on how to comply with the law. The intention is to keep people in work for longer tenure on the one hand, and reduce recruitment costs for employers by increasing staff retention on the other.

Transition To Net Zero

In its Autumn Budget Submission, the Confederation of British Industry (CBI) urged the government to build confidence in the transition to net zero by utilising tax incentives which can drive investment into high-growth green technologies. It was further suggested by the trade body to bolster business certainty with a Business Tax Roadmap alongside long-term business rates reform. The CBI is of the view that the government can accelerate the transition to Net Zero by linking the UK and EU carbon pricing systems. This, while improving the attractiveness of the emissions trading market, will also accelerate decarbonisation as a linkage of these two systems would prevent carbon leakage and prevent costly implementation of the Carbon Border Adjustment Mechanism. It stressed on the need for making green tax incentives part of a comprehensive strategy to promote high-growth green technologies. A new Green Innovation Credit, a 10-per cent corporation tax rate for green profits as well as an enhanced green super-deduction would help unlock private sector R&D and ensure the UK remains internationally competitive as it seizes the prize of green growth.

Natural Fibres Under Scrutiny

It is generally understood that the natural textile fibres used in fashion are more environment friendly than synthetic fibres due to their natural origins. As they still represent more than 70 per cent of all fibres found in the environment, they may be less biodegradable than expected hence may significantly affect health of ecosystems. In the same regard, a group of academics urged the environmental scholars to focus more on the environmental sustainability issues associated with natural textile fibres. They called for changes in the way research is conducted into fibre and textile pollution since very little is known about environmental impact of natural fibres and their toxicity. So far, the research in microfibers and textile pollution has been mainly focused on plastic or synthetic materials only, while modifications to natural fibres to textile applications can alter their chemical structure, resulting in a slower rate of biodegradation or run the risk of chemicals leeching into the environment. Thus, exclusion of natural fibres in fibre pollution research ends up promoting misinformed sustainability policies. The demand now is to explore the potential risks associated with the persistence, toxicity and chemical load of natural fibres. This will require interdisciplinary academics collaborations, such as from the field of forensic science and forensic fibre specialists, as well as integration of expertise from outside environmental science. This also calls for scientific community to work on standardising terminology as definitions are not consistent within research literature. The standardised definitions will make knowledge exchange easier and more transparent, the academics opined.

CPTPP membership

According to an early September reporting, the UK had secured the sixth and final ratification needed to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) which is a major free trade area spanning five continents. The sixth ratification came from Peru, after ratifications from Japan, Singapore, Chile, New Zealand and Vietnam, recognising UK’s accession and paved the way for the agreement to officially enter into force by December 15, 2024. The CPTPP membership will allow over 99 per cent of the current UK goods exports to CPTPP countries become tariff-free, potentially boosting UK’s economy by around £2 billion (~$2.63 billion) annually by 2040. By acceding to this agreement, the UK will be well positioned to shape its future development, from influencing the development of the CPTPP rulebook to championing the group’s expansion to new economies.

Fabric Digitisation Centre

In August, Arts University Bournemouth (AUB) launched the UK’s first Fabric Digitisation Centre, (FDC) housed within its Innovation Studio, which aims to cater to growing demand for advanced material digitisation and testing services within the fashion industry. The innovative facility will significantly enhance the quality of digital materials available for 3D design software programmes such as CLO and Browzwear. By providing high-quality digital fabrics, the centre aims to support the UK’s advancement in cutting-edge 3D design technologies. In the same regard, the centre will utilise state-of-the-art technology to convert real-life fabrics into 3D digital fabrics by capturing surface texture and physical parameters. The FDC will make it easier and faster for UK fashion businesses to adopt sustainable practices by reducing waste and enhancing resource efficiency.

ALCHEMPro News Desk (SB - WE)