- Make UK survey finds a quarter of
firms are moving activity overseas
Manufacturing Outlook 2026 Q2 -
Google Drive
Key findings:
- Orders and output holding up
- Yet 1 in 4 companies moving
activity overseas
- More than a quarter have less than
a years' cashflow left as margins squeezed
- Investment being delayed and
headcount reduced
- More than half of companies yet to
see any benefit from the industrial strategy
- Business confidence lowest in 4
years
Britain risks becoming the first advanced economy to have an
industrial strategy without a significant industrial base to
support as an increasing number of manufacturers are moving
production overseas or, are actively considering doing so, in
response to the soaring costs of the UK business environment.
Despite a promise in last year's Industrial Strategy of bold
action to bring down energy costs, nothing has yet been delivered
to support businesses. Make UK is today warning ministers that
manufacturers' patience has run out and that member companies are
taking action to move production elsewhere a warning backed by
the Trades Union Congress.
Commenting on the findings, Stephen Phipson, CEO of Make UK,
said:
The time for talking is over. The time for action is now. Britain
faces deindustrialisation unless manufacturers get relief from
high energy prices.
Electricity and gas in the UK are far too expensive and it's
costing our country steeply. We cannot afford to be delayed by
political upheaval, or by further consultations. For the sake of
thousands of jobs across Britain, the Government needs to step in
and act now to expand the British Industrial Competitiveness
Scheme to all of the manufacturing industry and speed up
delivery.
The warning comes on the back of a major survey released today by
Make UK which raises the spectre of the deindustrialisation of
the UK accelerating, In particular due to the UK's eye watering
energy prices which were already the highest in the G7 but, have
increased further since the start of the conflict in the Middle
East. The continued increases in energy costs come on top of a
raft of increased employment costs from the increase in National
Insurance Contributions and raising of the threshold at which
they are paid.
The pressures are increasing despite the outlook for orders and
output holding up, in line with the latest PMI, as profit margins
are being squeezed due to costs continuing to exceed companies'
ability to raise prices. This is leading companies to burn
through cashflow with more than a quarter saying they have less
than twelve months of cash left and one in ten saying they are
likely to become insolvent in the next year.
In response, Make UK is continuing to call for the proposed
business energy support scheme to be brought forward from 2027
and, expanded to 130,000 companies across the whole manufacturing
sector, not just the 10,000 companies it is currently aimed at
helping.
Paul Nowak, General Secretary of the Trades Union Congress, today
joined Make UK's call for action:
"BICS is an important step towards tackling the punishing cost of
energy for manufacturers. But, with Donald Trump's reckless war
in Iran continuing to hammer energy bills, the scheme needs to be
expanded further to protect jobs and keep factories and plants
running. We also need a long-term plan to support workers in
manufacturing industries and bring bills down for good through
energy efficiency and decarbonisation. That's how we can reduce
the impact of shocks and secure the future of UK industry.
According to Make UK's survey almost 1 in 10 (9%) of companies
have already moved production overseas due to higher business
costs, with a further 16% considering doing so. Almost half (46%)
have seen a further increase in their energy bills since the
start of the conflict in the Middle East, with 6 in 10 passing
this rise on to customers.
However, despite increasing their prices, margins are continuing
to be squeezed with almost all companies (98%) saying they will
see a very significant or somewhat significant impact on their
profitability. In response, almost 4 in 10 (38%) of companies
have delayed investment and more than a fifth (21%) have reduced
their headcount.
While these forward-looking indicators for the next year are very
concerning, the survey shows despite these current conditions are
holding up. Output remained positive at +26% (up from +21%) while
orders also remained positive though dipping slightly to +18%
from +21%). Investment intentions dropped significantly, however,
from +20% to +15%.
In response to the weaker outlook for the next year, Make UK has
downgraded its forecasts for manufacturing to +0.4% for this year
(down from 0.9%) and just +0.1% for 2027.
The survey of 254 companies was carried out between 6 and 27 May
