Manufacturing growth is a hot topic now and being widely discussed across industry in the UK. As we are just weeks away from the Autumn Statement on November 17th. Typically, this event brings about modest adjustments to the tax and regulatory landscape. However, on rare occasions, like the mini budget last year, we’ve witnessed radical changes that could set the UK Economy on an uncertain path. Despite this, we remain cautiously optimistic that such drastic measures won’t be necessary in the upcoming announcement. Although the results of today’s by-elections may exert pressure on the Government to consider more unconventional solutions to rejuvenate our stagnating economy.
As widely reported in the media, the UK is grappling with stagnant GDP, soaring inflation, and the looming spectre of a wage spiral. As a result, all of which pose significant challenges for manufacturers. Make UK, a prominent organization representing the interests of the UK Manufacturing , has revised its 2023 forecast. Concluding a 0.5% decline in output for the year is likely. This downturn is attributed to a sharp decline in activity driven by increasing interest rates, the rising cost of living, and a slowing overseas market that’s impacting sales. These findings align with a recent Purchasing Managers Index survey. Meanwhile, projections for the next year indicate a challenging market with sluggish growth.
Radical Intervention? Or is smart reform to Tax and Regulations required to stimulate UK Manufacturing growth
Another factor affecting UK manufacturing, especially in terms of exports and investment, is the impact of incentives offered by other countries, such as the US Inflation Reduction Act. This radical policy has redirected the focus of the US towards stimulating its own economy, diverting investment away from our shores.
Considering the above challenges, Make UK, in collaboration with RSM, has released the results of a recent survey of manufacturing businesses. The findings are striking, revealing that frequent alterations to policies regarding investment and R&D incentives have hindered business investment plans. Astonishingly, only 8% of companies claim that tax and regulation have had no impact on their investment decisions. This situation is concerning and clearly demands attention.
The report suggests that reforms should evaluate the suitability of measures such as Business Rates, research, and development (R&D) tax credits, the Apprentice Levy, and the Capital Allowances and Full Expensing system for the UK economy. Crucially, the report provides compelling evidence that companies believe an industrial strategy that involves reforming the current tax and regulation system would lead to increased investment in labour and skills, R&D, and decarbonization.
You can read the full report over at the Make UK website and you can also register for a webinar on 23 November between 11-12 here.
Action required to stimulate Manufacturing Growth
What is imperative is that the UK Government begins to address these issues promptly to safeguard the UK manufacturing sector. Clearly an antiquated tax system and a confused regulatory system, post Brexit is not helping businesses achieve their potential.
Working in Manufacturing, what are the biggest challenges you face as we head into 2024. What do you think will re-ignite the sector. Are the challenges in manufacturing effecting your chances of finding new employment? Use our social media posts to comment.
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