How new technologies will drive productivity in the Business Services and manufacturing sectors: our latest UK economic outlook through an industry lens

31 May 2016

Our UK Economic Outlook report predicts that employment is set to grow by around three million over the next decade, with the total number of jobs reaching almost 37 million by 2025.

One of the biggest drivers of this will be business services, with the sector expected to create up to 1.5m new jobs, positioning it as the second biggest services sector with a total workforce of 7.9m As many as 900,000 of these additional jobs predicted to cover professional, scientific and technical activities.

Growing by a further one million, education and health is likely to be the UK's biggest employer with 8.3m strong workforce in ten years.

But as the UK’s industrial structure continues to shift, the analysis also reveals a potential loss of around 600,000 roles in manufacturing, bringing the number of jobs down to two million - and below construction employment levels for the first time in recorded history. The factors behind this include the ongoing rise of new automated technologies, which continues to boost productivity and overseas competition remaining fierce.

Here are our initial views.

Cara Haffey, UK Industrial Manufacturing leader: The environment is undeniably tough for UK manufacturers as they continue to deal with issues from fluctuating commodity prices and exchange rates to China's economic slowdown and increasing competition. But one thing that we’ve consistently seen throughout history is this sectors ability to evolve and adapt in the face of challenge – and I’m confident we’ll see this now. We’re entering a technology renaissance that has the potential to transform the look, systems and processes of organisations and, as our recent CEO survey showed, UK firms are already responding with much greater awareness of the need for digital and technology innovation.

While the UKEO recognises the potential for smart automation to boost productivity, in many cases we’re seeing robots being employed to complement rather than replace workers, with ‘cobotics’ operator and machine teams working together to make complex assembly processes faster, easier and safer. Augmented reality is being used by some firms to support hands-free training and speed up track inventory or maintenance request responses and, while in its infancy, 3D printing has the potential to enhance product development, prototyping and innovation.

As well as helping companies meet evolving stakeholder expectations, technological advances can lead to improved communication across the supply chain, better understanding of customer demands and transform how core risks are defined and managed. While we may see some workforce pattern changes over the next decade, there is no denying the focus CEOs are currently placing on securing and sustaining a skilled pipeline of operators and technicians to help them make the most of the opportunities that lie ahead.

Kate Wolstenholme, UK Business Services leader: Our latest economic analysis continues to paint a very positive outlook for those working across the sector. When considering the drivers for this, what has been particularly striking in recent years has been the growth in entrepreneurial activity, driving significant expansion in the number of private sector businesses, a rise of 40% from 2000 to 2013, and stimulating demand.
As we look ahead, the trend towards outsourcing is set to continue alongside strong growth in professional services such as law, accounting, consulting and real estate services. Clearly the use of new technology, automation and artificial intelligence will help boost productivity and, as a result, may cause some workforce displacement in the coming years.

However, any resulting drop in costs and prices could also further boost demand with the potential to generate employment opportunities in the medium to long run."

Cara Haffey | Partner, UK Industrial Manufacturing leader
Email | +44(0)20 721 23497
Kate Wolstenholme| Partner, UK Business Services leader
Email | +44 (0)20 7804 4803


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