UK manufacturers plan to invest more as a result of the industrial strategy
27 October 2025 
More than a third (37%) of UK industrial companies say they plan to accelerate their investments as a result of the government’s recent announcement of a long-term industrial strategy, according to a new survey from Make UK and RSM UK. But the survey coincides with findings that investment intensity in manufacturing last year dropped to its lowest level since the EU referendum in 2016.
Make UK and RSM UK are urging the Government to use the forthcoming Budget to extend investment incentives, which the survey reveals are key drivers of manufacturers’ investment decisions. According to their Investment Monitor 2025 report, 37% of companies make their investment decisions based on the availability of tax reliefs.
“Manufacturers have long called for an industrial strategy and it’s clear that this is set to bring immediate benefits in terms of accelerating investment projects,” comments Make UK senior economist, Fhaheen Khan. “However, it’s clear that we’re at a critical juncture for investment, and there is a real sense of urgency.
“The forthcoming Budget must not only safeguard current incentives but, refine them with a set of carefully targeted measures to focus on boosting the take up of accelerating technologies and innovation,” he adds. “Furthermore, the statement should end the frequent tax changes to incentives we have seen in recent years, by committing to a business tax regime which is set in stone for the lifetime of this Parliament.
As well as analysing the impact of Government policy, the survey of 170 companies, conducted in July and August, also reveals investment trends across UK manufacturing. Some 43% of the companies quizzed say that the industrial strategy is driving them to invest in decarbonisation, while 35.4% say they are investing in data analytics and AI, and 34.2% in increasing their manufacturing capacity.
Skills (47.6%) has overtaken plant and machinery (44.1%) as the leading investment priority for the coming 12 months. More than two thirds (68%) of companies are investing up to 10% of their turnover in plant and machinery, with a further 18% investing 10-50%.
However, investment intensity (investment as a percentage of turnover) is just 6.8% – the lowest since 2017, and significantly down on 2024 when it reached a ten-year high of 8.1%.
More than two thirds of companies (68%) say that they are investing up to 10% of their turnover in R&D, while 18% are investing 10–50%. R&D intensity has also fallen slightly to 6.2%, from 6.5% last year.
“Despite headwinds, UK manufacturers remain optimistic, but to allow them to transform, invest and drive future prosperity they need a helping hand from the government, not more taxes,” says Mike Thornton, head of manufacturing at RSM UK. “Simplification is key here. We know tax reliefs influence investment decisions, so the chancellor has a real opportunity to make them more accessible and easier to claim in the forthcoming budget. This will not only boost investment but drive innovation, improve productivity and accelerate economic growth through industry.”
RSM UK: LinkedIn
