Reshoring could bring around 100,000 to 200,000 jobs back to the UK by the mid-2020s
Published at 10:10 AM on 10 March 2014
Reshoring¹ has the potential to create between around 100,000 and 200,000 extra UK jobs over the next decade in sectors from textiles and advanced manufacturing to business support services and R&D, according to new analysis from PwC.
This scale of reshoring could boost the level of UK GDP by around 0.4-0.8% by the mid-2020s, which equates to around £6-12 billion at today’s values (relative to a baseline where no such reshoring occurs).
The trend to reshore reflects a range of recent developments that are expected to continue in future. These factors include: a desire to locate closer to consumers with fast-shifting preferences; a reduction of the wage gap with emerging economies such as China; volatile international transport costs; and a desire by UK managers to better control quality, inventory levels and supply chain risks. The report argues that businesses need to take a fresh look at their location decisions in the light of these trends.
John Hawksworth, chief economist at PwC, said:
“Since the 1990s, there has been a major trend in the UK and other advanced economies for businesses to offshore activities to lower cost emerging economies. However, there are signs that the tide may be beginning to turn, with examples of ‘reshoring’ back to the UK starting to crop up in a range of different industry sectors.
“This trend to reshore is still at a very early stage, but our analysis suggests that the impact on jobs and output could build up gradually to material levels over the next decade or so. Of course, some jobs will also still be offshored over this period, but it should be much more of a two way street going forward.
“While the manufacturing industry will benefit, reshoring is also expected to have an impact on internationally mobile services activities. We estimate, for example, that it could create up to 20,000 jobs over the next decade in the areas of research and development, business support services and telecommunications.
“Policymakers can support this trend towards reshoring by encouraging the formation of centres of excellence, upgrading infrastructure to provide more efficient transport services, working with employers to boost skills, and maintaining an internationally competitive tax regime in the UK.”
Darren Jukes, UK manufacturing leader, PwC, said:
"Reshoring offers significant opportunities for UK manufacturing in terms of growth and job creation, particularly in sectors ranging from textiles to the manufacturing of computers, electronics and other machinery.
"It also highlights the highly competitive positioning and attractiveness of the UK manufacturing industry against global competition."
Notes to Editors
¹Estimating the scale and timing of reshoring is difficult given that it remains a very new trend, the evidence for which is relatively anecdotal at present and not readily captured by official statistics. However, by using a plausible set of assumptions on potential changes in import intensity in sectors with characteristics suited to reshoring, we can estimate the broad order of magnitude of the potential impact on the UK economy looking over roughly the next decade (i.e. until the mid-2020s). See our report for full details of our methodology and assumptions.
To view the full report, visit: http://www.pwc.co.uk/the-economy/publications/uk-economic-outlook/index.jhtml
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