UK manufacturers: industrial strategy would drive investment
21 October 2024 
Most UK manufacturers (70%) believe that a long-term industrial strategy for the country could lead to a surge in offshore manufacturing being brought back to the UK, according to a new survey by Make UK and RSM UK. Just 3% say such a strategy would make no difference to the likelihood of re-shoring, with a mere 1% of saying it would make no difference to their businesses.
The survey of 209 companies – published in a the Investment Monitor 2024 report – was carried out before the Government’s recent announcement of a Green Paper on its industrial strategy. It suggests that half of UK manufacturers would increase investment in their UK facilities in response to a new strategy, 30% would adopt more automation, 29% would boost exports to the EU, while 26% would raise their R&D budgets. Make UK estimates that if manufacturing’s contribution to GDP were to rise to 15%, it would add £142bn to the economy.
Contrary to a widespread belief, the survey also shows that UK-owned companies invest more than foreign-owned companies in both plant and machinery (8.7% compared to 4.7%) and R&D (5.5% compared to 5%). According to Make UK, this shows the potential benefits of an industrial strategy that creates growth among home-grown businesses, which then scale up.
As well as analysing the impact of Government policy, the survey also reveals investment trends in UK manufacturing. It shows that plant and machinery (53%) and staff (52%) are the two top priorities for investment in the coming 12 months. Almost two-thirds of manufacturers (64%) invest up to 10% of their turnover in plant and machinery, with a further 26% investing 10-50% of turnover. Furthermore, 72% of companies invest up to 10% of their turnover in R&D, while 18% invest 10-50%.
Looking ahead to the Autumn Statement, 56% of the companies surveyed say that reducing corporation tax would have the biggest impact on their levels of investment, followed by the expansion of capital allowances to software (53%) and the extension of full expensing to leased and second-hand machinery (46%). Almost a third (30%) say that high interest rates are the biggest obstacle to raising finance.
Following last week’s announcement of its industrial strategy Green Paper, Make UK is calling on the chair of the Industry Strategy Council to announce details of the sectors on which the Government intends to focus – including advanced manufacturing – as soon as possible. It says these sectors should be given the remit to focus on future technologies in which the UK can become self-sufficient and resilient, with a focus on national security.
“Manufacturers are ready to unleash the benefits to investment from a long-awaited industrial strategy,” says Make UK senior economist, Fhaheen Khan. “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.”
