UK Awaits Long-Term Industrial Strategy
Confidence amongst UK manufacturers has endured rising costs and geopolitical upheaval. Verity Davidge, Policy Director at Make UK, explains why a long-term industrial strategy is needed to jump start the UK economy before that confidence is lost.
As we approach the early summer, with a new President in the US, and a UK Government almost a year old, 2025 is proving to be no less challenging than recent years. Despite the current challenges from escalating costs and a potential trade war following the end of the entire transatlantic relationship of the last eighty years, a majority of companies believe that, overall, the UK remains a competitive place in which to manufacture. Furthermore, according to Make UK’s latest Senior Executive survey[i], they remain confident that the opportunities for their business in 2025 far outweigh the current risks by some margin.
In response, the survey shows manufacturers are backing their belief in the UK as a place to manufacture with a significant emphasis on developing new products, entering new markets and upskilling and retraining staff. The survey also gives credence to the view of some Economists that companies will counter the impact of increased costs by investing in new technologies and automation to improve their efficiency.
To back the investments companies are making, Make UK is now urging the Government to set out in detail as soon as possible the full proposals of a formal long-term industrial strategy, something which is expected alongside the Government Spending Review in June.
The survey is quite clear on the benefits such a strategy will bring, with more than half of companies saying they will increase investment in response to a long term industrial strategy. In addition, more than four in ten companies believe such a strategy will lead to increased productivity, and a similar number say it will help them secure the skills they need for the future.
The survey also shows that, despite the challenges companies are facing at home and abroad, almost half of companies believe the UK remains a competitive place to manufacture compared to a quarter who disagree. In addition, almost two thirds of companies believe the opportunities for their business in 2025 outweigh the risks compared to just over one in ten who disagree.
However, despite these positive intentions, as many companies think the UK economy will deteriorate in 2025 as improve, while the challenges of increased costs are severe. Over nine in ten companies think their employment costs will increase, while more than three quarters think the costs from other business taxes will increase, and a similar number expect their logistics and transport costs to increase. Recent official data continues to show the UK economy flatlining while inflation ticking upwards is going to make life difficult for the Bank of England to engage in significant cuts to interest rates.
In response, Make UK will be stepping up its efforts to ensure the Government looks at measures to mitigate these substantial increases by reducing business rates in particular, as well as measures and incentives to aid decarbonisation and energy efficiency. Furthermore, amid reports of substantial cuts in public spending to come in the forthcoming Review it is absolutely essential that the Government now delivers its promise of a wide ranging, modern and long-term industrial strategy.
[i]makeuk.org/insights/reports/executive-survey-2025
