10 March 2014
Reshoring could bring back more than 100,000 extra jobs to the UK in the next decade, according to research by PwC.
The potential for 100,000 to 200,000 extra jobs by the mid-2020s will be driven by the textiles; advanced manufacturing; business support services; and R&D sectors.
PwC says the scale of reshoring could boost the level of UK GDP by around 0.4-0.8% by the mid-2020s, which equates to around £6-12 billion at today’s values (relative to a baseline where no such reshoring occurs).
The trend to reshore reflects a range of recent developments that are expected to continue in future. These factors include: a desire to locate closer to consumers with fast-shifting preferences; a reduction of the wage gap with emerging economies such as China; volatile international transport costs; and a desire by UK managers to better control quality, inventory levels and supply chain risks. The report argues that businesses need to take a fresh look at their location decisions in the light of these trends.
John Hawksworth, chief economist at PwC, said: ‘Since the 1990s, there has been a major trend in the UK and other advanced economies for businesses to offshore activities to lower cost emerging economies. However, there are signs that the tide may be beginning to turn, with examples of “reshoring” back to the UK starting to crop up in a range of different industry sectors.
‘This trend to reshore is still at a very early stage, but our analysis suggests that the impact on jobs and output could build up gradually to material levels over the next decade or so. Of course, some jobs will also still be offshored over this period, but it should be much more of a two way street going forward.’
PwC has also stated that ‘estimating the scale and timing of reshoring is difficult given that it remains a very new trend, the evidence for which is relatively anecdotal at present and not readily captured by official statistics. However, by using a plausible set of assumptions on potential changes in import intensity in sectors with characteristics suited to reshoring, we can estimate the broad order of magnitude of the potential impact on the UK economy looking over roughly the next decade (i.e. until the mid-2020s).’