Industrial Strategy set to bring investment boost

However, Make UK and RSM UK are urging the Government to use the forthcoming Budget to not just safeguard vital investment incentives which the survey shows are key drivers of manufacturers’ investment decisions but, to extend them further. According to the survey, almost four in ten companies (37%) make their investment decisions based on the availability of tax reliefs. This call coincides with findings that investment intensity in manufacturing dropped to its lowest level last year since the immediate aftermath of the EU Referendum in 2016.

Fhaheen Khan, senior economist at Make UK, said: “Manufacturers have long called for an industrial strategy and it’s clear that this is set to bring immediate benefits in terms of accelerating investment projects. However, it’s clear that we’re at a critical juncture for investment, and there is a real sense of urgency. The forthcoming Budget must not only safeguard current incentives but, refine them with a set of carefully targeted measures to focus on boosting the take up of accelerating technologies and innovation. Furthermore, the statement should end the frequent tax changes to incentives we have seen in recent years by committing to a business tax regime which is set in stone for the lifetime of this Parliament.

Mike Thornton, head of manufacturing at RSM UK, added: “Despite headwinds, UK manufacturers remain optimistic, but to allow them to transform, invest and drive future prosperity they need a helping hand from the government, not more taxes. Simplification is key here. We know tax reliefs influence investment decisions, so the chancellor has a real opportunity to make them more accessible and easier to claim in the forthcoming budget. This will not only boost investment but drive innovation, improve productivity and accelerate economic growth through industry.”

As well as analysing the impact of Government policy, the survey also provides a comprehensive view of investment trends across UK manufacturing.

The announcement of an industrial strategy is being specifically used to drive investment in decarbonisation by more than 4 in 10 companies (43%). Investment in data analytics and AI (35.4%) and increased manufacturing capacity (34.2%) are a priority for around a third of companies.

Skills has overtaken plant and machinery as the leading general investment priority in the next twelve months (47.6% and 44.1% respectively). Amid the ongoing debate about the investment performance of UK industry compared to international competitors, almost two thirds of companies (68%) invest up to 10% of their turnover in plant and machinery, with a further fifth (18%) investing between 10% and 50%.

However, investment intensity (investment as a percentage of turnover) is now the lowest since 2017 at 6.8%, down significantly from last year when it reached a ten-year high of 8.1%.

Furthermore, more than two thirds of companies (68%) invest up to 10% of turnover in R&D, while almost one in five (18%) invest between 10% and 50%. R&D intensity has also fallen slightly to 6.2% from 6.5% last year.

The survey of 170 companies was conducted between 23 July and 21 August.

Read the report at:

www.makeuk.org/insights/reports/investment-monitor-2025