Main Findings
The principal findings of the background study (with report references in italics) are -

• Manufacturing remains very important to the UK economy, accounting for 14% of Gross Domestic Product (GDP), half of UK exports, 75% of industrial R&D, and employment for over 3 million (11.2% of the workforce) – see paragraph 1.2.
• The scale of the UK’s trade gap in goods (mainly manufacturing) has deteriorated markedly in the past decade – see Figure 2.2. A £20Bn trade surplus on financial and business services (which now accounts for 25% of GDP) only makes good about one third of the £60Bn trade deficit in goods.
• The overall trade gap has worsened by 20% pa since 2000 – see Figure 2.3. It needs to be stressed that this figure is in £M “cash of the day” with no allowance for inflation and GDP growth, which tends to dampen out the appearance of past variations when compared with those of recent years.
• The percentage of GDP represented by manufacturing has declined from 27% to 14% over the past 25 years – see paragraph 3.4. Although this decline is often attributed to outsourcing and reclassification of certain manufacturing activities as financial and business services, only 20% of the decline can be attributed to this cause – see paragraph 3.6.
• The manufacturing sectors which make up the largest proportion of exported goods and create most value are chemicals, transport equipment, electrical and office equipment – see Figure 3.5.
• The sectors which ended 2007 in surplus were chemicals, transport equipment, basic metals, publishing, and tobacco products – see Figure 3.5.
• UK manufacturing sectors have grown more slowly than other advanced economies over the past 25 years – see paragraph 3.13.
• Figure 3.7 shows the UK Current Account Balance compared with other major industrialised economies. This figure is shown in US $Bn, and tends to exaggerate the magnitude of the US deficit because of the size of that economy.
• Manufacturing Gross Value Added (GVA) per employee in the UK (£48k) is higher than other sectors (£31k on average) – see paragraph 4.5.
• Investors from outside the UK own about 40% of UK shares listed on the London Stock Exchange – see paragraph 4.7. Whilst only 4% of UK businesses are foreign-owned – see paragraph 4.11 – these are in general the larger companies which contribute 33% of manufacturing GVA – see paragraph 4.14.
• Whilst foreign-owned firms have had a positive impact upon UK productivity, they are likely to locate higher-value activities such
  as research, design, development, branding and marketing in their home country.