Executive summary (2/3)

Theme Key policy questions addressed Key findings

 Are UK sectors becoming more or less competitive internationally?

 The UK’s aerospace manufacturing sector was the third largest in the OECD in 2019, behind only the United States and France.

3.1

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 How are UK sectors performing in terms of productivity, value added and employment?

 Are UK sectors investing enough in R&D compared to their international competitors?

 The UK’s aerospace manufacturing sector specialises in engines and other aircraft components such as wings; its trade surplus (US$14.7 billion) was the third largest in the world in 2021.

 14,000 jobs were lost in the sector in 2020–21 due a collapse in demand driven by the Covid-19 pandemic, which let to company restructuring and accelerated supply chain consolidation.

 UK aerospace competitiveness is underpinned by advanced R&D and innovation capabilities, with UK business expenditure on aerospace R&D ranking third among OECD countries and growing steadily in the last decade.

 The UK’s food and beverages manufacturing sector was the sixth largest in the OECD in 2019, behind the United States, Japan, Mexico, France and Germany.

 Demand in the food and beverages sector has proven to be highly resilient to recessions and disruptive events, including the financial crisis, the COVID-19 pandemic and Brexit, as reflected by the sector’s growth in value added over the last decade and its stable productivity levels during this period.

 Are UK sectors becoming more or less competitive internationally?

3.2

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 How are UK sectors performing in terms of productivity, value added and employment?

 Are UK sectors investing enough in R&D compared to their international competitors?

 Most food and beverages manufacturers are focused on meeting domestic UK demand and have limited incentives to export. The UK produces around 60% of its domestic food consumption by economic value though imports are an essential part of the industry due to geography, weather and land availability. The UK’s food and beverage sector has one of the largest trade deficits in the world, though it remains a leading exporter in high value niches such as whiskey.

 UK business expenditure on food and beverages R&D has increased steadily during the last decade, reaching levels comparable to other leading OECD nations.

 Product innovation is a key focus of the UK food and beverages sector. However, economic and demand uncertainty may be hindering investment in innovation. Industry consultations suggest that opportunities exist to increase the adoption of digital and automation solutions, particularly among SMEs.

 Unfilled vacancies have been a long-standing issue in the sector, with vacancies per 100 employees increasing to 9.1 in Q3 2022, from 6.3 in Q2 2022, which is more than double the UK average of 4.1.