Manufacturers need Budget action as spring stockpiling boost fades

John Bryant, Head of Manufacturing at MHA, comments on today’s S&P manufacturing PMI data: 

“UK manufacturing activity remains broadly flat, with the sector struggling to turn its natural optimism into meaningful momentum. Activity appeared to peak in the spring and early summer, likely supported by a degree of stockpiling, but has since fallen back. While the sector remains in positive territory, there now needs to be decisive action from government to support growth. Manufacturers want to invest and move forward, but high energy prices, rising employment costs and the continued complexity of exporting to the EU are weighing heavily on confidence.

“There are encouraging signs, including the Chancellor’s recent announcement on the new age of reindustrialisation and major investment announcements from companies such as Rolls-Royce and McLaren. These commitments can create a valuable knock-on effect throughout the supply chain. However, they sit alongside a much more mixed picture across the wider sector, including recent cuts announced by JLR.

“The Government’s Industrial Strategy is a positive idea in theory, but manufacturers now need to see more detail and delivery. Without clear incentives to unlock investment, there is a risk that the strategy simply sits on the shelf gathering dust.

“The upcoming Budget is an opportunity to change that. Businesses need practical measures that encourage capital investment, tackle persistently high energy and fuel costs, and provide greater certainty around skills. The apprenticeship levy also requires further work to ensure it reflects the realities of training people in the workplace.

“Manufacturing cannot remain flat indefinitely. Two years on, the sector still feels as though it is waiting for the announcement that will provide a genuine catalyst for growth. The Budget must help convert ambition into action and give manufacturers the confidence to invest, expand and strengthen supply chains.”

Among its UK locations, accountancy and advisory MHA has offices in Edinburgh and Aberdeen.

For further information, visit www.mha.co.uk