UK manufacturers face harsh recession, industry body warns

Britain’s manufacturers are set to “plunge into recession” next year due to deteriorating economic conditions globally, a report from Make UK has found.

The body, which represents UK manufacturers, blamed the forecast on increasing costs across the board, tighter fiscal and monetary policy and weakening consumer demand. The results, which were based on a survey of 330 firms, suggest the UK’s manufacturers are headed for “a perfect storm” the body said.

Manufacturing is forecast to contract by -3.2 per cent in 2023, which comes on the back of a forecast -4.5 per cent contraction this year. The number for this year is relative to a very strong 2021, which reflected the pandemic bounceback.

Make UK has consistently been revising down its forecasts for manufacturing growth in 2022 throughout this year from 3 per cent in March to 1.7 per cent in July, 0.6 per cent in September and now, a contraction of -4.5 per cent.

It highlights the extent to which conditions for the sector have weakened significantly, especially in the final quarter of the year.

“While the Chancellor has already brought in some welcome measures to help ease the cost pressure on companies in the short term, it may not be too long before we see him having to bring more firepower to ease cost pressures,” said Stephen Phipson, chief executive of Make UK.

“However, the bigger issue is that the UK risks sleepwalking into an acceptance that little or no growth is the norm. Government needs to work with industry as a matter of urgency to deliver a long-term industrial strategy that has growth at national and regional levels at its heart.”

Richard Austin, national head of manufacturing at BDO, said: “Manufacturing input prices are growing rapidly, so it is little wonder UK manufacturers are having to pass the costs on to their customers in order to remain viable.

“Without the right government support and reassurance, manufacturing businesses will be inclined to retain cash to keep the doors open, rather than invest cash in future growth and competitiveness of the sector. There is little clarity on how the new government plans to build the right longer-term environment in which the sector can effectively plan.”

According to the Office for National Statistics, the number of manufacturing businesses in the UK fell from 270,000 at the start of 2021 to 244,140 a year on.

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