Despite increased economic and geopolitical uncertainty, the UK’s manufacturing sector is optimistic that the government’s new Industrial Strategy - set to be published during in the spring - will be a “game changer for investment.”
That's one of the conclusions form the Make UK and PwC UK’s Executive Survey 2025, which spoke to 161 senior manufacturing executives, and which looks at the opportunities, risks and challenges for their business in the year ahead.
Anticipating positive outcomes from the work being done on Industrial Strategy, more than half of those surveyed said that they will increase investment in response to a long-term industrial strategy. In addition, more than four in ten believed that an industrial strategy will lead to increased productivity, with a similar number saying it will help them secure the skills they need for the future.
“While it's true that UK manufacturers are navigating a complex business landscape - compounded by rising costs - there's a palpable sense of optimism and resilience underpinning the sector's trajectory for 2025. This optimism is fueled by hopes of increasing clarity on the proposed UK industrial strategy, as well as a decisive shift towards technology adoption,” said Cara Haffey, leader of industrials and services at PwC UK.
The government published its Invest 2035: The UK’s Modern Industrial Strategy consultation document in October last year. It sets out how an industrial strategy will maximise its impact on growth by stimulating investment and activity in eight sectors with the highest growth potential. These include advanced manufacturing; clean energy industries; creative industries; defence; digital and technologies; financial services; life sciences; and professional and business services.
In terms of what help manufacturers would like to see from the government provide, 50% called for a reform of the business rates system, the survey found, with 46% calling for more detail on the Industrial Strategy, while 43% want commitments to long-term infrastructure projects.
The survey also finds that the manufacturers surveyed felt that “the opportunities for success outweigh the risks of potential failure.” Just under half of the respondents, 47%, either strongly or somewhat agreed that the UK will be a competitive place for manufacturing activities - even within the challenging landscape - while 63% strongly or somewhat agreed that “the opportunities to succeed outweighed the risks.”
“Manufacturers have demonstrated their resilience over and over again in recent years and, despite the numerous challenges they face, those that remain innovative and are prepared to invest in new technologies, expanding markets and, most crucially, their people will continue to thrive,” said Make UK CEO Stephen Phipson.
“To help companies navigate a way through these challenges it is now vital that government sets out as a matter of urgency the immediate and significant priorities as part of its formal industrial strategy given the very clear benefits manufacturers believe this will bring.” Phipson added.
The report concludes that the UK has a good foundation in its academic institutions and innovative businesses to build on but adds: “However, to maintain our global competitiveness, the UK needs to increase R&D spending and improve the commercialisation of scientific and engineering discoveries. We currently spend spend just 1.5% of GDP on R&D whereas the US spends 3%. By boosting R&D spend as a percentage of GDP, the UK could develop cutting edge technologies, attract skilled talent, and create more high value manufacturing jobs and companies."
SCI has been advocating for a comprehensive industrial strategy to champions science-based businesses, and launched its own Manifesto for an Industrial Science and Innovation Strategy with recommendations include establishing an Innovation & Science Growth Council with a direct reporting line to No10, reforming pension funds to encourage investment in start-ups to commercialise their innovations in the UK and simplifying the overly complex R&D tax relief system.
With the right conditions and package of support for science-based businesses, SCI has said, the UK should aim to see 15 start-ups scaling to £500m, five unicorns listing in the domestic market, and ten investments of £500m+ being made in manufacturing - all by 2030.
Further reading on science and innovation:
• A manifesto for an industrial science and innovation strategy
• PwC poll: skills and education key to industrial strategy
• UK chemicals industry jobs at risk without fossil fuel transition plan
Visit Blog