3 minute read - 21st October 2024
British manufacturers ready to invest with long term industrial strategy according to report
The introduction of a long-term industrial strategy could bring a surge of offshore manufacturing production back to the UK, according to an annual report on the investment landscape for UK industry, published by Make UK and RSM UK (link to the report below).
Almost three quarters of companies surveyed (70%) believe that the re-shoring of production back to the UK will accelerate in response to an industrial strategy, with just 3% saying it would make no difference. The findings are just two of a range of forecast benefits from such a strategy including greater investment in UK facilities, increased investment in automation and R&D, as well as a renewed push to increase exports to the EU.
Publishing the survey ahead of next week’s Autumn Statement and, in response to the green paper on industrial strategy announced last week, Make UK backed the survey results with a call for the chair of the Industry Strategy Council to announce the composition of the sector sub-groups as soon as possible, including advanced manufacturing, on which the government intends to focus.
70% of firms believe that the re-shoring of production back to the UK will accelerate in response to a long term industrial strategy – and that it will kickstart a greater investment in UK facilities / Picture: Getty/iStock
According to Make UK, these sub-sector groups should be given the remit to focus on the future technologies in which the UK can become self sufficient and resilient in the future, with a focus on national security. As such, the groups should be given the ability to call on cross department resources and support where necessary.
Fhaheen Khan, senior economist at Make UK, said: “Manufacturers are ready to unleash the benefits of investment from a long-awaited industrial strategy. It’s clear that this will bring a wide range of benefits and aid companies who are accelerating their moves into greater use of automation and digital technologies, with increased recruitment of higher-level skills. Given the US, Europe and China are moving at pace with plans to boost investment in green technologies in particular, the UK needs to match these efforts step for step.”
Mike Thornton, head of manufacturing at RSM UK, added: “It’s clear the impact a comprehensive, forward-looking strategy will have on manufacturers. Rather than lagging behind the UK’s economic recovery, strategic clarity will unlock growth, innovation and even kickstart a re-shoring bonanza – creating jobs, boosting key business and infrastructure investment and improving productivity.”
According to the survey, as well as increased re-shoring, half of companies would increase investment in existing facilities in the UK, almost a third (30%) would increase automation and increase exports to the EU (29%), while more than a quarter (26% would increase R&D. Just 1% of companies said the introduction of an industrial strategy would have no impact on their business.
Confidence in domestic demand and improved export outlook is driving investment, according to the latest Make UK survey / Picture: Getty/iStock
The survey also shows that compared to perceived beliefs, UK owned companies have higher levels of investment intensity than foreign owned companies in both plant & machinery (8.7% compared to 4.7%%) and R&D (5.5% compared to 5%). According to Make UK, this shows the potential benefits to investment in the UK from an industrial strategy which creates growth among home grown businesses who then scale up.
Looking ahead to the Autumn Statement, more than half of companies (56%) say reducing corporation tax would have the biggest impact on investment, closely followed by the expansion of capital allowances to software (53%) and the extension of full expensing to leased and second hand machinery (46%). Separately, almost a third of firms (30%) said that high interest rates were the biggest obstacle to raising finance adding to pressure on the Bank of England to cut rates at its meeting next month.
As well as analysing the impact of government policy, the survey also provides a comprehensive view of investment trends across UK manufacturing. It shows that plant and machinery, along with labour, remains the top priority for companies’ investment in the next twelve months (53% and 52% respectively). Amid the ongoing debate about the investment performance of UK industry compared to peers, almost two thirds of companies (64%) invest up to 10% of their turnover in plant and machinery with a further quarter (26%) investing between 10% and half of turnover. Furthermore, almost three quarters of companies (72%) invest up to 10% of turnover in R&D, while almost one in five (18%) invest between 10% and half.
