2017: Year in Review

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In case you hadn’t noticed we love a listicle and what better way to review the year that’s just gone than a list of 17 noteworthy stats about 2017. 

Before I get into that, a couple of reflections on how things have panned out, against our expectations at the start of the year. If we focus solely on the UK economy for a moment, it wouldn’t be out of line to say the performance has disappointed – GDP growth has slowed, households are squeezed as pay rises weren’t as big as hoped for, productivity growth hasn’t budged and it doesn’t feel like we’re much clearer on what to do about it.

But none of this came out of nowhere, with most economists forecasting this broad direction of travel back in January.

There has, however, been some upside developments – in the rest of the world and consequently in manufacturing. In both cases, growth in the global economy and in the UK looks like it will finish 2017 on a much stronger footing than we had anticipated.

Special mention, however, needs to be made of the political developments in the UK over the past year – few of which we’d have dared predict at the start of the year. Indeed, the PM triggering Article 50 in March seems like one of the most mundane events of the year, when compared to what happened when she walked up a hill, called an election and lost the government’s majority.

So on with the listicle – here’s how all of that developed in 17 statistics:



19.9% – the year on year rise in manufacturers’ input costs


We knew it was coming after sterling’s post-referendum slump. And in January the statistics made clear that the pound’s fall was not all upside for exporters with input costs rising by a whopping 20% in the year to January. It wouldn’t be long before we saw the pass through into consumer prices.  


132 – the number of pages in the government’s industrial strategy green paper


A modern industrial strategy was an early commitment from Theresa May when she became PM (in addition to making sure Brexit means Brexit). We waited.

And in January, government published a green paper setting out the ten policy pillars BEIS saw as crucial to tackling the UK’s productivity puzzle. 12 weeks of consultation followed and for us, a whole heap of engagement and dialogue with manufacturers. Little did we know that the green paper would look like light reading compared with the 255 page white paper that emerged in November.




859 – the number of delegates at EEF’s National Conference


February saw EEF pull together the biggest annual conference to date, with 859 delegates gathering for the first time since the EU referendum to debate where next for UK manufacturing in the global economy; what can continue to make the UK a great place for global business and what does manufacturing need to know about digitalisation?

We’re aiming for better again, with the Opposition leader confirmed as a keynote speaker next year – you can see what else is in the line-up and register on our conference website



2% – the OBR’s upgrade growth forecast for the UK in 2017


Back in March the OBR did something they may not do again for a while – revised up their growth forecast for this year from 1.4% (November 2016) to 2%. Their assumptions at the time that momentum from 2016 would only be paused briefly by the inflation-driven squeeze on incomes, before business investment started to accelerate in the later part of the year seemed reasonable enough. At the time.

Actual developments in the economy mean that optimistic view was to be reversed in the OBR’s November forecast, published alongside the Autumn Budget.



-0.4% – the change in real annual earnings in the three months to March
The squeeze on real incomes did kick in, as the OBR contended. With earnings growth failing to launch and CPI inflation surging past the Bank of England’s 2% target for the first time since 2013, real earnings to a hit. The effects of this squeeze were subsequently evident in lower consumption growth and subdued activity in consumer facing sectors.




57.3 – UK manufacturing PMI


While households’ contribution to growth was subsiding, manufacturing activity was on the up. April marked a three year high in the manufacturing PMI activity indicator, a trend that would be echoed in official data and our own Manufacturing Outlook survey.

This was not just a UK phenomenon, in the same month we saw a healthy bounce in eurozone manufacturing – with PMI’s topping levels not seen for six years. This was to mark the start of what is now a familiar narrative about a rebounding global economy (with a bit of extra oomph from the weak sterling) supporting export intensive sectors and their supply chains. 



6 – the number of metro mayors elected


A quick departure from Economics. New institutional structures, formed as part of the devolution agenda, crystallised in May with the election of six new mayors for major cities in England.

The elections didn’t break any turnout records (ahem), but this democratic mandate to deploy decision making and budget tailored to local challenges and opportunities is nonetheless significant – for individuals and businesses.

It looks like we’ll add to the ranks of Manchester, Liverpool, Tees Valley, West Midlands, Cambridgeshire & Peterborough and West of England in 2018, but how long before all parts of England have an opportunity for a mayor or a devolution deal is yet to be seen.




5 years – the last time growth was as weak as it was in the six months to June
It turns out there wasn’t too much momentum carried into 2017, with the first two quarters chalking up GDP expansion of 0.3%. As expected – there was a marked drop in household’s contribution to growth and patchy trade and investment trends indicated these weren’t adequate foundations in other parts of the economy to fill the void.


Elsewhere though, European economies were moving in the other direction, with growth in the first half the year the best seen since the financial crisis.



-82,000 – the change in net migration to the UK from the European Union


And speaking of the European Union, the year to June saw a sharp fall in the number of immigrants from the EU to the UK. In total net migration fell by 106,000 with citizens from the EU accounting for 89,000 of those. UK attitudes to migration, improving economic prospects in the rest of the Europe, the value of sterling and uncertainty about the status of migrant workers post March-2019 could all have played a part in the trend. Whatever the reasons, this won’t help the skills and recruitment challenges facing UK manufacturing.  



-13 – the net reduction in seats held by the Conservative party


There was also a reduction in the number of tory MPs in parliament. In what must have seemed like a good idea at the time, a snap general election left the PM with the opposite of a thumping majority – weeks of wrangling with the DUP to establish a functioning minority government (not to mention weeks of waiting for the bookies to pay out on it).

And for those that had money on Labour being in No 10 by Christmas, there’ll be no pay outs if you specified Christmas 2017.



4.3% – the unemployment rate in the three months to July


The UK labour market – a continual source of reasons to be cheerful (except, of course on the pay front). Defying expectations month after month unemployment continued to fall through this year with the rate hitting a 42-year low of 4.3% in July.

In line with survey indicators, manufacturing employment has been on the up in 2017 too, with the number of workforce jobs hitting their highest number since 2009. There are no shortage of vacancies either. Surely an acceleration in earnings growth can’t be far away?


We published our annual Regional Manufacturing Outlook report - get the headlines here and our thoughts on the state of global trade.



€1.08 – sterling exchange rate


One of the most cited business risks at the start of this year – sterling volatility hasn’t disappointed. Market twitchiness with every political development or sub-consensus economic release has led to some turbulence for the pound. Against the euro, sterling hit a low point this year in August, falling to a near eight-year low of €1.08.

Have manufacturers learned to live with a volatile currency? We’ve asked them again for our 2018 Executive Survey, in partnership with AIG, and we’ll be blogging on the headlines in January.




37% – the balance of companies reporting rising export sales in 2017q3
Don’t get me wrong a weak sterling isn’t just a problem, it’s also been a boon for many exporters. In September our quarterly Manufacturing Outlook survey, in partnership with BDO, revealed an extremely buoyant picture of UK manufacturing. All the headline output and orders balances had strengthened, but the turnaround in export sales in the year to 2017q3 was pretty remarkable. At the end of 2016 a net balance of companies were seeing falling export demand and in the three months to September 2017 we were looking at a record balance of companies reporting growth in the overseas markets, with notable strength coming from Europe. This trend was to be sustained into the final months of the year with expectations that 2018 exports would get off to a similarly positive start.



9000 – the number of EEF_Economist Twitter followers
We’ve been spreading the word about the UK’s vital manufacturing sector on the twitter since 2009. The positive messages and (hopefully) incisive policy blogs helped to our target of 9000 followers in October 2017.


Our facts about industry, infograhics on the fourth industrial revolution and tweets about sterling have topped the charts this year. Many thanks to the @EEF_Economists team – we’ll be keeping it up in 2018!


A key question for this year and next - what will happen to business investment? We published our thoughts in our annual Innovation Monitorin partnership with Santander.



25 basis points – the change to Bank rate


There will be some people who have completed an apprenticeship, bought a house and had several cars on PCP and didn’t realise this could happen. In November, for the first time in ten years the MPC voted by 7-2 for a quarter point increase in Bank rate. Historic mainly because of the recent rarity of monetary policy changes, interest rates remain at exceptionally low levels. If growth ticks over, pay starts to pick-up and the exchange rate pass through fades, as the bank expects, further rises would be limited and gradual.



As part of our input into HM Treasury budget deliberations, we published a report on manufacturing process innovation.


3.1% – the CPI inflation rate


After the Bank’s Super Thursday, the ONS inflation print for November added weight to the judgement of the seven. CPI rose again to 3.1% prompting some correspondence between the Bank Governor and the Chancellor – we need to wait until the next Super Thursday to see the details, but our guess is that we’ve hit the peak and the Governor can put his writing pad away.  

(1 – controversial Swiss penalty that means any 2018 year in review blog will not contain any commentary on Northern Ireland’s success or otherwise in Russia.)



$65 – the price of Brent crude


While the influence of exchange rate developments on consumer prices is fading, an increase in commodity prices could pick up the baton and keep above-target inflation in the news. The recent increase in the oil price is one example. After languishing below $50 in the summer, a combination of stronger global activity, OPEC sticking to its cuts and some production disruptions, mean Brent hit a high point for 2017 in December at over $65 per barrel. But as we’ve blogged before, US shale could be important in stopping the oil price taking off. Still, for manufacturers, there is still the job of managing risks from rising scrap prices, pension costs, business rate rises ….. etc. But that’s for 2018.


And in the new year we’ll have 18 predictions for 2018, together with manufacturer’s expectations of what might lie ahead in the next 12 months in our Executive Survey.

Season’s Greetings!

EEF Economists 





Chief Economist

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