Chemicals industry growth continues despite despite investment uncertainty

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The chemicals sector is one of the biggest British manufacturers (Source: Getty)

Britain’s chemicals and pharmaceutical sector continued to grow in the third quarter in spite of a clouded outlook on long-term investment, according to an industry body’s report.

A net balance of 13 per cent of chemicals firms reported sales growth in the three months to September, according to the Chemical Industries Association.

The chemical and pharmaceutical industry adds £14.4bn of value to the UK economy every year from total annual turnover of over £4bn. This represents around a tenth of the value added by the whole of UK manufacturing.

Read more: Chemical and pharmaceutical firms swing to positive near term outlook

Employment growth in the sector hit its highest quarterly reading since 2015. A balance of 12 per cent of member companies of the association reported an increase in jobs.

The sector, which exports £50bn of chemicals per year, recorded a further growth in exports, although a net balance of only six per cent of firms reported an increase.

Capital investment and research and development spending are both set to increase over the coming year, with 30 per cent and 24 per cent net balances respectively.

However, Brexit uncertainty is holding back longer-term investment, the association said.

The chemicals industry is highly exposed to the future trade deal with the EU.

Almost two-thirds of companies in the sector export what they make to the world, the highest proportion of any goods manufacturing sector in the UK economy.

Some 60 per cent of those exports go to the EU while 75 per cent of chemicals imports and raw materials come from the bloc.

Steve Elliott, the group’s chief executive said “While our outlook is tempered by Brexit uncertainty, there are genuine and exciting opportunities for the sector in the UK building on our excellent university links, pushing forward innovation, developing supply chains and moving to a new energy future.

“Much of this work is done in regions of the UK where employment is desperately needed,” he added.

Read more: Chemicals industry urges tariff-free Single Market access to keep investors