The Effect of the Crude Oil Price on the Uk Manufacturing Companies

This essay explores how the international price of crude oil affects the manufacturing sector within the UK economy.It employs a quantitative research approach using deductive reasoning to investigate the connection between these two factors.The study presents two hypotheses and develops two models -a linear regression model and a vector autoregressive model -to assess the impact of crude oil prices on manufacturing output.Both models consistently indicate a negative association between crude oil prices and manufacturing output.An increase in crude oil prices tends to reduce production among UK manufacturing firms, primarily due to rising production costs.Conversely, when crude oil prices decrease, production tends to increase.Furthermore, the research also uncovers negative influences on manufacturing output from inflation rates and exchange rates, while gross domestic product (GDP) exhibits a positive correlation with manufacturing output.