UK manufacturers increase pressure on government over industrial strategy

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

A post-Budget survey of senior manufacturing executives found that 57 per cent believed a long-term industrial strategy would lead to investment, despite concerns about higher wages and energy costs.

Make UK, the manufacturers’ lobby, warned: “The pressure on the future industrial strategy to put investor confidence on the path to growth will now be even greater.”

The high expectations for the industrial strategy come as Whitehall backs up what government officials want. He warned Last week UK public finances came under increasing pressure from bond markets to bear a harsher spending review.

A senior Whitehall official said there was a growing risk of a mismatch between the industrial strategy’s expectations and what could be achieved, given the current lack of government funding for seed funding outside core missions such as achieving net zero or boosting defence.

“There is no money except for tanks or windmills,” said a Whitehall official.

The survey of 161 manufacturing executives echoed the CBI and other leading trade groups including British Chambers of CommerceRachel Reeves highlighting the impact of increasing employers’ National Insurance contributions.

More than 90 per cent of respondents said employment costs would be their biggest expenditure over the next year, driven by NIC increases, wider work rights and an increase in the National Living Wage.

As a result, the survey found, businesses are looking to cut costs and raise prices, adding to inflation in the economy. “This will be painful for their customers and employees,” Make UK added.

However, despite the gloomy outlook, the survey, which is scheduled to publish an industrial strategy in the spring, identified a “high level of optimism” that would confirm the “investment shift”.

Labor government announced that Last October, Industrial Strategy announced plans to target eight sectors, including advanced manufacturing, clean energy and life sciences. Increase investment and drive economic growth.

A senior executive from carmaker Nissan has said the publication of its industrial strategy is “critical to the future” of UK automotive design and manufacturing.

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

The strategy will be chaired by Claire Barclay, CEO of Microsoft UK, through a 16-member Industry Strategy Advisory Council. Other members include Rolls-Royce chairman Dame Anita Frew and Greg ClarkFormer Conservative Business Secretary.

A consultation on the shape of the industrial strategy closed in November, Whitehall insiders said. It attracted a great response from the businessMore than 3,000 responses were submitted to the Department of Trade and Commerce.

UK chief executive Stephen Phipson said more detail was needed on issues such as skills and regional devolution policy.

He added, “The government has taken a big and positive first step, but now it needs to set out immediate and significant priorities and support it in terms of the clear benefits that manufacturers believe it will bring.”

Industry Minister Sarah Jones said she welcomed the confidence shown in the potential of the industrial strategy. “We will do everything we can to promote the UK’s high-quality industries to international investors,” she added.

Data visualization by Amy Borrett