Britain's chemical industry returns to growth 

Figures released by the Chemical Industries Association indicate a significant turnaround in the chemical sector – one of Britain’s biggest manufacturing export industries – showing signs of growth.

Chemical businesses - often seen as the ‘engine room’ of the British economy - have reported higher sales, higher production levels, and greater capacity utilisation during the first quarter of 2024 compared to the end of 2023. Looking ahead, optimism prevails, with over 50% of businesses anticipating higher sales and more than 40% expecting an increase in new orders, production levels, and capacity utilisation. However, it remains a very challenging environment with the sector having to tackle increasing costs for both labour and raw materials. More than 60% of businesses foresee labour costs worsening, while 47% anticipate increases in raw material prices.

Steve Elliott, Chief Executive of the Association, said:

"These latest results are positive, but the key question now is whether this marks the start of a sustained improvement. It has been a tough couple of years for the chemical industry." He continued, "An upturn in our more immediate commercial fortunes is, of course, very welcome, but it doesn't mask the longer-term challenge of establishing a more compelling UK investment case for chemicals – especially given that 4 in 10 companies have moved their production outside of the UK. We look forward to working with a new Government to address that urgent need."

Michela Borra, Economist at the Association, emphasised:

"Official government data reveals that current chemical production has declined by over a quarter since 2019. However, even if our latest survey shows signs of improvement, we need stronger Government support in terms of a more competitive policy and funding landscape, allied to the recovery of the European industrial sector.  Without these, our ability to return to pre-pandemic operating capacity will be severely compromised”

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• Businesses who make chemical products and solutions are integral to something like 96% of all manufactured goods.  Whether it is ingredients for food and medicines; paints and coatings for cars and planes or materials for mobile phones and electric vehicle batteries, the chemical industry is truly the “industry of industries” – also playing a critical role in the nation’s response to Covid-19 through its supply of hand sanitiser, PPE and vaccine ingredients.

• The Association’s manifesto sets out a series of offers and asks for the Government

• Our survey was conducted between 8 and 19 April,. 50 companies of all sizes from across the UK responded.

• Chemical businesses are located throughout the UK, with many of them clustered together in the North East of England, North West of England and Central Scotland.  These factories and laboratories, operated by a highly trained and skilled workforce, make a significant contribution towards the UK’s productivity performance.  

• Roughly 140 thousand people are employed in the sector and nearly half a million have roles that are dependent on the sector. Chemical workers typically earn around 21% more than other manufacturing industries and almost 27% more than the average worker.

• From Runcorn to the Humber Bank; from Teesside to Grangemouth, chemical businesses and their employees right across the country are essential to the Government’s levelling-up agenda.

• We are the country’s second biggest manufacturing exporters, sending goods to the value of more than £60 billion to other countries. The EU represents our most important market, but we continue to work closely with Government to inform and secure UK trade deals with other key chemical markets such as Japan and the USA.