Manufacturing in Scotland needs to be encouraged as the sector experiences a downturn in activity, warn accountants and business advisers BDO. The sector suffered a four point dip in the firm’s latest Manufacturing Optimism Index. BDO is calling for action to encourage the sector in the forthcoming budget announcements both at Westminster and Holyrood.

In Scotland last year there were 8,550 manufacturing firms employing 181,630 people with a combined turnover of £41,112 million. This makes manufacturing the third highest sector by turnover (after mining, utilities and wholesale and retail trades), and the second highest by employment. Its importance cannot be underestimated.

MARTIN GILL, head of BDO LLP in Scotland, said: “Our index found that the sector was at its lowest level since March 2013. The concern is that this is an essential part of the Scottish economic mix which needs to be nurtured and developed. There is an opportunity in the forthcoming budget in July to reduce the rate of National Insurance for manufacturing to stimulate growth. In Scotland we project that this could create up to 5069 jobs and boost GDP by over £202m per year.“

“The further concern is that we must make Scotland attractive to overseas investors interested in manufacturing. While there are only 400 (4.7% of Scottish manufacturing sector) overseas-owned manufacturing firms in Scotland they account for 56per cent of turnover and 32.5% of employment.

“If any of these should find a more favourable tax regime or financial incentives elsewhere, either abroad, or within the UK, then Scotland could start to experience a real drop in GDP.”

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