The manufacturing industry has urged the government to prioritise growth in the upcoming Budget, as the sector grapples with “existential threats” following a prolonged downturn. Over the past year, manufacturers have encountered increasing pressures due to soaring business costs in the wake of Labour’s initial Budget, compounded by tariff uncertainties and persistently high energy prices that have eroded confidence in the sector.
The latest Purchasing Manager’s Index (PMI) from S&P Global indicated a modest recovery, with the industry reaching a 13-month high of 49.7. This improvement was largely driven by Jaguar Land Rover’s return to form after a cyber attack severely disrupted its production and supply chain. However, factory output across the country remains below the crucial 50.0 threshold, which would signify growth.
Experts caution that this recovery could be short-lived if the government imposes further pressures on firms in the Autumn Budget. The industry body Make UK has expressed concerns about potential additional burdens and costs arising from changes to inheritance tax affecting family businesses and the anticipated Employment Rights Bill.
Stephen Phipson, Chief Executive of Make UK, highlighted the challenges businesses face, citing a “potent combination of weak demand at home and abroad, as well as escalating costs across the board.” Make UK has called for a government commitment to no further national insurance hikes and a targeted exemption from business rates for investments in green technologies.
The manufacturing PMI figures, released yesterday, revealed a decline in employment for the twelfth consecutive month in October, with labour costs identified as the primary factor. Rob Dobson, Director at S&P Global Market Intelligence, expressed concerns that the forthcoming Budget might exacerbate challenges created by the previous year’s Budget, particularly regarding the impact of the national minimum wage and employer NIC on costs, demand, and production.
Phipson emphasised the need for growth-focused measures, stating, “If we are to get growth off the floor, then it is going to be business that provides it, and this Budget simply has to have growth as the number one focus.” He also urged the government to address the energy support scheme, warning of an “existential threat” to many companies due to rising industrial electricity prices.
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