Manufacturers still see the UK as a competitive place to operate
13 January 2025 
Britain’s manufacturers believe that the introduction of an industrial strategy will be a gamechanger for increasing investment and boosting productivity, while helping them to secure the skills that they need for the future, according to a new survey by Make UK and PwC. It also reveals that, despite the current challenges – including escalating costs and a potential trade war – most manufacturers believe that the UK remains a competitive place in which to manufacture, and that the opportunities for their businesses in 2025 far outweigh the risks. However, as many think the UK economy will deteriorate in 2025, as will grow.
The annual Make UK/PwC Executive Survey asked 161 senior manufacturing personnel about the opportunities, risks and challenges their business face in the year ahead, as well as the outlook for the UK and international economies.
The survey reveals that, despite the challenges companies are facing at home and abroad, almost half of companies (49%) believe the UK remains a competitive place to manufacture, compared to a quarter who disagree. Almost two thirds (63%) believe the opportunities for their businesses in 2025 outweigh the risks, compared to 14% who disagree.
However, almost as many companies (34%) think that the UK economy will deteriorate in 2025 as improve (37%). The vast majority (92%) think that their employment costs will rise, 76% think the costs from other business taxes will increase, and 72% expect their logistics and transport costs to grow.
The manufacturers are backing their belief in the UK by developing new products, entering new markets and upskilling and retraining staff, the survey reveals. More than half (57%) are planning to increase investment in new technologies, AI and automation in response to a long-term industrial strategy. Almost half (43%) believe such a strategy will lead to increased productivity and 42% say it will help them secure the skills they need for the future.
More than three quarters (78%) of the manufacturers say they are developing new products, almost half are deploying new technologies, and 37% are planning to enter new markets.
Make UK is urging the Government to set out in detail as soon as possible its full proposals for a formal long-term industrial strategy. It is also asking the Government to look at measures to mitigate price increases by reducing business rates, in particular, as well as measures and incentives to aid decarbonisation and energy efficiency.
“Manufacturers have demonstrated their resilience over and over again in recent years and, despite the numerous challenges they face, those that remain innovative and are prepared to invest in new technologies, expanding markets and, most crucially, their people will continue to thrive,” says Make UK CEO, Stephen Phipson. “But, they can only do this if they are operating in the most favourable business environment and there is little doubt that the next 12 months are set to be immensely challenging in a complex international environment.
“To help companies navigate a way through these challenges it is now vital that Government sets out as a matter of urgency the immediate and significant priorities as part of its formal industrial strategy given the very clear benefits manufacturers believe this will bring,” he continues. “By doing this, it will help re-boot business confidence and ensure the year gets off on a positive footing in terms of the relationship between industry and Government.”
“While it’s true that UK manufacturers are navigating a complex business landscape – compounded by rising costs – there’s a palpable sense of optimism and resilience underpinning the sector’s trajectory for 2025,” adds Cara Haffey, leader of industrials and services at PwC UK. “This optimism is fuelled by hopes of increasing clarity on the proposed UK industrial strategy, as well as a decisive shift towards technology adoption. The sector is moving from viewing technology as a source of incremental improvements towards acknowledging its power to transform operations.
“Additionally, there’s a strong focus on innovation, with companies investing in new product lines and business development to seize growth opportunities,” she says. “This approach, alongside efforts in product development, upskilling, cost management, and embracing technology, positions manufacturers well to navigate challenges and contribute significantly to national economic growth.”
