Approved Business Finance has placed manufacturing among the UK industry groups that contracted between 2020 and 2025, using Office for National Statistics business-population data to compare changes across 615 individual industries grouped into 19 broader Standard Industrial Classification categories.
Manufacturing recorded -1.2% in the study’s five-year average growth measure, placing it below arts, agriculture and other service activities but above wholesale and retail, transport and storage, financial and insurance services, public administration and defence, and mining and quarrying. Electricity, gas, steam and air conditioning recorded the strongest positive figure at 12.5%, followed by real estate at 4.2% and information and communication at 3.5%.
The broader UK business population also ended the period slightly below its 2020 level. The number of active enterprises covered by the analysis fell from 2,749,700 in 2020 to 2,734,615 in 2025, a reduction of 15,085 businesses or 0.55%, although the final year reversed part of that decline as the total increased from 2,724,770 in 2024.
Approved Business Finance also puts the five-year change in manufacturing turnover at -4.08%, adding a revenue measure to the reduction in business numbers. That figure describes a different aspect of industrial activity from factory output, because turnover can be affected by prices, product mix, acquisitions and changes in the size of surviving businesses, while enterprise counts can fall even when production becomes concentrated in larger companies.
The manufacturing category also covers industries with substantially different investment and demand cycles. Food production, aerospace, metal processing, machinery, electronics, chemicals and automotive manufacturing can move in opposite directions while remaining inside the same broad headline figure, leaving the overall decline compatible with substantial capital investment in individual sectors.
More recent official output data illustrates that variation. ONS figures for the three months to July 2026 showed manufacturing output 0.5% higher than during the three months to April, with seven of 13 manufacturing subsectors expanding. Computer, electronic and optical products rose 3.9%, machinery and equipment increased 3.0%, and food, beverages and tobacco grew 1.1%, while electrical equipment, wood and paper, and basic metals moved in the opposite direction.
The July monthly figure was stronger again, with manufacturing output increasing 0.9% and eight of 13 subsectors growing. Computer, electronic and optical products rose 5.2% during the month, pharmaceuticals increased 3.4%, and basic metals gained 2.8%, showing how short-term production can improve even while the longer business-population measure remains below its earlier level.
Mark Kozo, commercial director at Approved Finance Group, said: “Our data shows that while some industries are expanding rapidly, growth is far from being evenly distributed across the UK economy.” His accompanying comments concentrate on the capital required when businesses add machinery, stock, employees or premises, although the research itself does not establish access to finance as the cause of the manufacturing decline.
Capital requirements can nevertheless shape the rate at which industrial businesses expand because manufacturing growth frequently requires expenditure before additional output produces revenue. Machinery, factory alterations, tooling, energy connections, inventory, testing and skilled labour can all have to be funded in advance, creating a different expansion profile from activities that can add capacity largely through people or software.
Business-count data has similar limitations when used as a proxy for industrial strength. An acquisition may remove one registered enterprise while keeping its machines and workforce in production, whereas the formation of a new company adds to the count before it has necessarily installed equipment or generated significant output. Insolvencies, group restructuring and legal changes can therefore move the number of enterprises without creating an equivalent change in physical manufacturing capacity.
Employment and investment can also move independently of enterprise numbers. A smaller population of manufacturers can still support rising output where surviving companies add shifts, machinery or automation, while a growing number of registered businesses does not guarantee equivalent gains in productive capacity if many remain small or pre-revenue. The business-count trend is therefore best read alongside output, employment and capital-spending indicators rather than as a standalone measure of industrial health.
The five-year results are more useful as a measure of structural direction than as a current production indicator. Manufacturing did not share the business-population growth recorded in energy, real estate, information and communication, healthcare or construction across the period studied, while several of its subsectors have since returned to output growth during 2026.
The combination leaves UK manufacturing with two different trends operating at once: the population of manufacturing enterprises has weakened over the longer comparison, while recent production data includes growing high-technology and machinery segments. Future business-register releases will show whether stronger output begins to translate into a broader recovery in the number of manufacturing businesses, or whether production continues to consolidate among a smaller industrial base.
