British manufacturers have urged ministers to bring a stop to “the weekly roster of short-term gimmicks” and “gesture politics” that are adding to pressures confronting the sector in the UK.
Stephen Phipson, chief executive of Make UK, which represents the manufacturing industry in the UK, warned that investment was suffering from the effects of “political chaos” and uncertainty of the past six years since the Brexit vote.
In a survey of companies over the past quarter, Make UK found that investment in manufacturing had “nosedived” as companies have been forced to postpone their plans to safeguard cash as inflationary pressures and rising energy costs fuel economic concerns.
The survey, carried out with BDO, also showed that growth and orders have slowed significantly, while UK manufacturing exports have come almost to a standstill.
“As a result, there is an urgent need to move away from the weekly roster of short-term gimmicks and put in place a long-term economic plan and vision which will provide companies, and investors, with the certainty and confidence they so badly need for a return to real growth.”
Phipson joins the increasingly loud call for the government to engage better with business over how to manage the economy, as well as criticism of its “wedge issue” politics over matters such as the Northern Irish protocol that threatens further trade disruption.
Make UK said that businesses and foreign investors wanted to see that the UK has the “capacity to operate in a serious manner with a long-term vision befitting a modern and outward looking Britain”.
Phipson said that the UK was heading for “very stormy waters in the face of eye-watering costs and a difficult international environment”. He added that this threatened to shatter expectations of a sustained recovery from the pandemic and called on the government to help struggling businesses.
“Given the rate at which companies are burning through their balance sheets just to survive it must take immediate measures to help shield companies from the worst impact of escalating costs and help protect jobs.”
Energy costs are still the biggest concern for manufacturers, with two-thirds of companies telling Make UK these were “causing catastrophic or major disruption”.
Manufacturers are calling for an emergency, pre-recess package of business support measures to help companies from escalating costs.
Make UK wants the government to waive or reduce business rates for the next 12 months, implement VAT deferrals for larger businesses and waive completely for smaller companies, and temporarily freeze the climate change levy or, if energy costs continue to rise, remove it completely.
The Treasury is drawing up new investment incentives in the autumn budget as part of tax-cutting plans. Make UK also said the government needed to extend its existing super-deduction investment policy.
The survey measures the difference between the proportion of employers who expect an increase and those who expect a decrease. The balance on output fell from a net +24 per cent in the first quarter to +10 per cent, with total orders almost halving from +42 per cent to +20 per cent. The export market has almost ground to a halt at +4 per cent, compared with +18 per cent in the first quarter.
Investment intentions dropped sharply from +27 per cent in the first quarter to just +5 per cent. Manufacturers expect to continue to increase UK and export prices in the next quarter at the highest levels in the survey’s 30 year history.
Make UK has forecast growth for manufacturing in 2022 of +2.3 per cent, down from 3 per cent in the first quarter and 3.3 per cent in the last quarter of 2020, and 1.7 per cent in 2023.
The government said: “We continue to support our manufacturers, including through the tax system with the Annual Investment Allowance and the super-deduction — the biggest business tax cut in modern British history.”