UK manufacturing is facing significant challenges, with output and orders sharply declining due to rising business costs and global trade uncertainties. A new survey from Make UK and BDO reveals that the sector is struggling with increased employment taxes, higher energy, logistics, and raw material costs. This downturn is the first in over a decade, with output dropping from +20% to -1%, and orders falling to -6%. Additionally, recruitment and investment intentions have also weakened.
Nearly half of manufacturing companies are freezing recruitment, and many are planning to reduce pay increases or consider redundancies. Export orders, once a stabilizing factor, have also weakened, with domestic demand dropping. Make UK forecasts a 0.5% contraction in 2025, urging government action to support the sector, including reducing trade complexities and boosting capital access.
Despite these setbacks, there is optimism that a comprehensive industrial strategy focusing on decarbonization and skills development could lead to growth by 2026.
