UK manufacturers and trade unions have issued a stark warning to Government, urging immediate intervention to tackle surging business costs that threaten the country’s industrial base and risk accelerating a shift of production overseas.
According to the latest Manufacturing Outlook survey from
Make UK, a growing number of companies are already relocating operations or actively considering doing so in response to rising energy and employment costs. The organisation cautions that Britain risks becoming the first advanced economy to pursue an industrial strategy without a strong domestic manufacturing foundation.
Despite Government promises of “bold action” in last year’s Industrial Strategy, firms say little has been delivered to ease pressures, particularly on energy prices, which remain among the highest in the G7 and have risen further since the onset of conflict in the Middle East.
Stephen Phipson, chief executive of Make UK, said the situation had reached a critical point. “The time for talking is over. The time for action is now. Britain faces deindustrialisation unless manufacturers get relief from high energy prices,” he said. “Electricity and gas in the UK are far too expensive and it’s costing our country steeply. We cannot afford to be delayed by political upheaval, or by further consultations. For the sake of thousands of jobs across Britain, the Government needs to step in and act now.”
The survey highlights the mounting financial strain on manufacturers. Although output and orders remain in positive territory, margins are being squeezed as costs continue to rise faster than companies can increase prices. More than a quarter of respondents said they have less than 12 months of cash reserves, while one in 10 fear they could become insolvent within the next year.
Energy costs are a central concern, with almost half of firms reporting further increases in their bills since the Middle East conflict began. Around 60% have passed these costs on to customers, yet 98% still expect a significant hit to profitability.
The pressures are also affecting investment and employment decisions. Nearly four in 10 companies have delayed investment plans, while over a fifth have reduced headcount. Meanwhile, 9% of manufacturers have already moved production overseas, and a further 16% are considering following suit.
Make UK is calling for the proposed British Industrial Competitiveness Scheme (BICS) to be brought forward from its planned 2027 introduction and expanded to cover the entire manufacturing sector, rather than the limited number of companies currently targeted.
The call has been backed by the
Trades Union Congress. General secretary Paul Nowak said: “BICS is an important step towards tackling the punishing cost of energy for manufacturers. But with Donald Trump’s reckless war in Iran continuing to hammer energy bills, the scheme needs to be expanded further to protect jobs and keep factories and plants running. We also need a long-term plan to support workers and bring bills down for good.”
Make UK has downgraded its growth forecasts for the sector to 0.4% for this year and just 0.1% for 2027, underlining the urgency of action to safeguard the future of UK manufacturing.