British manufacturers are increasing pressure on the government over industrial strategy

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Manufacturers have warned that the UK government must deliver on its promise of an effective industrial strategy to offset rising employment costs imposed by Chancellor Rachel Reeves in last October’s budget.

A post-budget survey of senior manufacturing executives found that 57 percent believed a long-term industrial strategy would lead to increased investment, despite concerns almost universally about higher labor and energy costs.

“There will now be even greater pressure on the new industrial strategy to steer investor confidence onto a growth path,” warned Make UK, the manufacturers’ lobby.

Expectations for the industrial strategy are high as Whitehall prepares for what government officials expect I warned will be a brutal spending review as Britain’s public finances came under increasing pressure from bond markets last week.

A senior Whitehall official said there was now a growing risk of a gap between industry expectations of the industrial strategy and what could be delivered, as government money was used for start-up funding outside of core tasks such as achieving net zero or strengthening the defense is missing.

“Unless it’s tanks or windmills, there’s basically no money,” the Whitehall official said.

The survey of 161 manufacturing executives mirrored those of other leading business groups, including CBI and British Chambers of Commerceby highlighting the impact of Rachel Reeves’ decision to increase employers’ National Insurance contributions.

More than 90 percent of respondents said employment costs would be their highest expenditure in the coming year due to the NIC increase, expanded employment rights and the increase in the National Living Wage.

As a result, the survey found that companies would seek both cost cuts and price increases, increasing inflationary pressures on the economy. “This will be painful for both their customers and their employees,” Make UK added.

However, despite the bleak outlook, the survey found “increased optimism” that the planned publication of an industrial strategy in the spring could prove to be “a turning point for investment”.

The Labor Government it announced Last October, the Industrial Strategy published a plan targeting eight sectors, including advanced manufacturing, clean energy and life sciences, to achieve this Boost investments and drive economic growth.

A senior executive at car maker Nissan said the publication of the industrial strategy was “crucial for the future” of British car design and manufacturing.

“Global competition for investment is at an all-time high and it is clear that British manufacturing is at a tipping point. Countries that can demonstrate a clear long-term strategy supported by policies that promote an attractive investment environment will come first,” the Nissan executive added.

The strategy will be overseen by a 16-strong Industrial Strategy Advisory Council chaired by Clare Barclay, managing director of Microsoft UK. Other members include Rolls-Royce chairwoman Dame Anita Frew and Greg Clarkthe former conservative economics minister.

Whitehall insiders said the consultation on the shape of the industrial strategy, which concluded in November, was complete met with great response from businesswith more than 3,000 responses submitted to the Ministry of Economy and Trade.

Make UK CEO Stephen Phipson said more detail was needed in areas such as skills and regional devolution policy.

“The Government has taken a major, positive first step but must now support it by identifying the immediate and important priorities it will contain, given the very clear benefits that manufacturers expect it will bring to them.” , he added.

Industry Minister Sarah Jones said she welcomed the confidence in the potential of the industrial strategy. “We will continue to do everything we can to promote the UK’s leading industries to global investors,” she added.

Data visualization by Amy Borrett