UK manufacturers increase pressure on government over industrial strategy

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Manufacturers have warned that the UK government must deliver on the promise of an effective industrial strategy to offset rising employment costs imposed by Chancellor Rachel Reeves in last October’s Budget.

A post-Budget survey of senior manufacturing executives found that 57 percent believe a long-term industrial strategy will lead to increased investment despite near-universal concerns about higher wages and energy costs.

“Pressure from the upcoming industrial strategy will now be even greater to instill investor confidence in the growth path,” warned Make UK, the manufacturers’ lobby.

High expectations for industrial strategy come as a brace for Whitehall government officials warned A brutal spending review will follow, as UK public finances came under increasing pressure from the bond market last week.

A senior Whitehall official said the lack of government money now available for seed-funding beyond core missions such as reaching net zero or boosting defence, increased the risk of a mismatch between industrial strategy expectations and what was deliverable.

“Unless it’s for tanks or windmills, there’s basically no money,” the Whitehall official said.

The survey of 161 manufacturing executives echoed that of other leading business groups, including the CBI and British Chamber of CommerceHighlights the impact of Rachel Reeves’ decision to increase employers’ National Insurance contributions.

More than 90 per cent of respondents said employment costs were set to be their top expenditure over the coming year, driven by increases in NICs, extended employment rights and increases to the National Living Wage.

As a result, the survey found that businesses will look to both cut costs and raise prices, adding inflationary pressures to the economy. “This will be painful for both their customers and their employees,” Make UK added.

However, despite the gloomy outlook, the survey identified “higher optimism” that the planned release of an industry strategy in the spring could prove “a game-changer for investments”.

Labor Govt His announcement Last October it unveiled a plan to target eight sectors, including industrial strategy, advanced manufacturing, clean energy and life sciences. Increase investment and drive economic growth.

A senior executive at carmaker Nissan has said that publishing industry strategy is “vital to the future” of UK automotive design and manufacturing.

“Global competition for investment is at an all-time high and it is clear that UK manufacturing is at a turning point. Countries that can demonstrate a clear long-term strategy, supported by policies that create an attractive investment environment, will be at the forefront,” the Nissan executive added.

The strategy will be overseen by a 16-member Industry Strategy Advisory Council, chaired by Microsoft UK chief executive Clare Barclay. Other members include Rolls-Royce Chair Dame Anita Frew and Greg ClarkFormer Conservative Business Secretary.

Discussions on the size of the industrial strategy closed in November, Whitehall insiders said Attracting a huge response from businessesMore than 3,000 responses have been submitted to the Business and Commerce section

Make UK chief executive Stephen Phipson said more detail was needed in areas such as skills and regional devolution policy.

“The government has taken a big, positive first step but now needs to back it up by setting immediate and significant priorities that manufacturers believe will deliver”.

Industry Minister Sarah Jones said she welcomed the show of confidence in the potential of the industrial strategy. “We will continue to do our best to promote the UK’s cutting-edge industries to global investors,” he added.

Data visualization by Amy Bourette