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Manufacturers have warned that the UK government must deliver on its promise to develop an effective industrial strategy in order to offset higher labor costs imposed by Chancellor Rachel Reeves in last October's budget.
A post-Budget survey of senior manufacturing executives found that 57% believed a long-term industrial strategy would lead to increased investment, despite almost universal concerns about rising wage and energy costs.
Make UK, the manufacturers' lobby, warned: “The pressure on the next industrial strategy will now be greater to put investor confidence on a path to growth.”
High expectations for the industrial strategy come as Whitehall prepares for what government officials do I was warned The spending review will be tough, as UK public finances came under increasing pressure from bond markets last week.
A senior Whitehall official said there was now a growing risk of a mismatch between industry expectations for the industrial strategy and what could be achieved, given the lack of government money available for seed funding outside core missions, such as reaching net zero or boosting defence.
“Unless it is for tanks or windmills, there is basically no money,” the Whitehall official said.
The survey of 161 manufacturing executives echoed those of other leading business groups, including CBI and British Chambers of Commerceby highlighting the impact of Rachel Reeves' decision to raise employers' National Insurance contributions.
More than 90 percent of survey respondents said staffing costs would be their top expense for next year, as a result of increased net national income, expanded labor rights, and a higher national living wage.
As a result, the survey found that companies will look to cut costs and raise prices, increasing inflationary pressures on the economy. Make UK added: “This will be painful for both their customers and their employees.”
However, despite the bleak outlook, the survey noted “increasing optimism” that the planned publication of an industrial strategy in the spring could prove a “game-changer for investment”.
Labor government I announced it The Industrial Strategy last October published a plan to target eight sectors, including advanced manufacturing, clean energy and life sciences, in an attempt to boost Investment promotion And drive economic growth.
A senior Nissan executive said the publication of the industrial strategy was “crucial to the future” of car design and manufacturing in the UK.
“Global competition for investment is at an all-time high, and UK manufacturing is clearly at a turning point. Countries that can demonstrate a clear long-term strategy, supported by policies that foster an attractive investment environment, will be at the forefront,” the Nissan executive added.
The strategy will be overseen by a 16-member Industrial Strategy Advisory Board chaired by Clare Barclay, Microsoft UK CEO. Other members include Rolls-Royce Chair Mrs. Anita Frew and Greg Clarkformer Conservative Business Secretary.
Whitehall insiders said consultations on the shape of the industrial strategy, which closed in November, had ended It attracted a huge response from businesswith more than 3,000 responses submitted to the Ministry of Business and Trade.
Stephen Phipson, chief executive of Make UK, said more detail was needed in areas such as skills and regional devolution policy.
He added: “The government has taken a big, positive first step, but it must now back this up by setting out the immediate and important priorities it will contain in light of the very 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. She added: “We will continue to do everything we can to promote the UK's cutting-edge industries to global investors.”
Data visualization by Amy Burritt
