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Manufacturers have warned that the UK government must fulfill its promise of an effective industrial policy in order to reduce rising labor costs set by chancellor Rachel Reeves in last October’s Budget.
A recent financial survey of senior manufacturing executives found that 57 percent believe the industry’s long-term strategy will lead to more investment, despite concerns about with high wages and energy costs.
“The pressure of the next industrial policy will be even greater to put the confidence of investors on the path of growth,” warned Make UK, the manufacturers.
The high expectations for industrial policy come as Whitehall prepares for what government officials will do they warned it will be a brutal test of spending, as the UK’s public finances came under increasing pressure from the debt market last week.
A senior Whitehall official says there is now a growing risk of disagreement between industry expectations about industrial policy and what can be produced, given the lack of government funding available for to support seeds outside of the main objectives, such as reaching zero or strengthening security.
“Unless it’s for tanks or air vents, there’s basically no money,” said a Whitehall official.
The survey of 161 manufacturing executives was echoed by other leading trade groups, including the CBI and British Chambers of Commercehighlighting the impact of Rachel Reeves’ decision to raise employers’ national insurance contributions.
More than 90 per cent of respondents said that employment costs would be their biggest expense for the coming year, due to the increase in NIC, extended employment rights and the rise in the national wage. self-employed.
As a result, the study found that businesses will focus on cutting costs and raising prices, increasing inflationary pressures on the economy. “This will be painful for their customers and for their employees,” Make UK added.
However, despite the bleak outlook, the survey showed “reinvigorated optimism” that the planned announcement of industrial policy in the spring could prove “a game-changer for investment”.
Labor Government it announced industrial policy last October, announcing a plan to target eight sectors, including advanced manufacturing, clean energy and life sciences, in order to boost investment and driving economic growth.
A senior executive from carmaker Nissan has said the announcement of the industrial strategy is “important for the future” of UK car design and manufacturing.
“Global competition for investment is at an all-time high and UK manufacturing is clearly in a state of flux. “Countries that can demonstrate a clear long-term strategy, supported by policies that promote an attractive investment environment, will be first in line,” said the Nissan executive.
The strategy will be overseen by a 16-member Industrial Policy Advisory Council chaired by Clare Barclay, chief executive of Microsoft UK. Other members include Rolls-Royce chairman Dame Anita Frew and Greg Clarkformer Conservative business secretary.
Whitehall investors said talks on the shape of industrial policy, which closed in November, had it has attracted a huge response from the businesswith over 3,000 responses sent to the Department of Trade and Industry.
Make UK chief executive Stephen Phipson said more information was needed in areas such as skills and regional supply strategy.
He added: “The government has taken a big, good first step, but now it has to back this up by setting the priorities quickly and the priorities that it will have based on the clear benefits that it will have.” producers who believe it will deliver.”
Industry Minister Sarah Jones said she welcomed the confidence shown in the industrial strategy. He added: “We will continue to do everything in our power to promote the UK’s advanced industries to global investors.”
Data visualization by Amy Borrett
