The increase in today’s manufacturing PMI data is positive news; however, the sector continues to face significant challenges.
There is hope that the government’s recent announcement on the Industrial Strategy will provide the welcome boost that the sector is looking for.
Despite the lack of detail in the Industrial Strategy, the mere publication of it with a few key highlights should be enough to give manufacturing businesses hope to plan for the future.
It did, however, provide some insight into how the government is planning to address the key concerns highlighted in MHA’s latest manufacturing report of skills, technology and investment.
Our survey also highlighted that the biggest challenge for manufacturing businesses was the increase in minimum wage and the rise in employers’ National Insurance. Many respondents commented that it had led to a reduction in headcount and a decrease in R&D investment as their costs were being diverted. Last week, at the British Chambers of Commerce conference, business leaders asked that there be no further tax increases on business in the upcoming Autumn Budget. However, it is uncertain as to whether geopolitical tensions could lead to further economic uncertainty, requiring yet another hike in taxes.
While the Industrial Strategy alluded to the UK’s pending trade deals, our survey highlighted that for UK manufacturers, the trading relationship with the EU needed to be consulted and brought in as soon as possible, as post Brexit changes have had a significant impact on their profitability.
It is evident from the Industrial Strategy that the government has been listening to businesses, particularly on energy costs and skills shortages. They get an ‘A’ for effort; however, to provide the support that is required, more specific details are needed sooner rather than later.
