Make UK, representing manufacturers, endorses Labour’s industrial strategy, predicting significant investment growth and reshoring opportunities.
- A survey reveals 70% of industry members expect accelerated reshoring driven by Labour’s ambitious green strategy, Invest 2035.
- The strategy promises long-term business stability and includes a consistent industrial policy council to prevent disruptive short-term changes.
- Targeting eight key sectors, the strategy aims to elevate UK manufacturing’s GDP contribution from 10% to 15%, adding £142 billion.
- Despite potential, high interest rates pose a challenge, with expectations of future Bank of England rate adjustments to mitigate investment barriers.
Make UK has expressed its support for Labour’s industrial strategy, anticipating a surge in investment and reshoring of manufacturing operations. The strategy, titled Invest 2035: The UK’s Modern Industrial Strategy, aims to provide businesses with long-term stability. According to a recent survey by Make UK, 70% of its members anticipate that reshoring activities will ramp up, stimulated by the strategy’s comprehensive approach to stable and foresightful industrial policies.
The strategy pledges to establish a standing industrial strategy council, ensuring consistency in industrial policy and guarding against the abrupt shifts that have historically plagued UK industrial sectors. It is focused on nurturing eight crucial growth sectors, which are pivotal to the UK’s economic prowess: advanced manufacturing, clean energy industries, creative industries, defense, digital technologies, financial services, life sciences, and professional and business services.
Make UK’s assessment shows that implementing Labour’s strategy could potentially transform UK manufacturing’s contribution to the economy. The sector, currently valued at £217 billion, has the potential to increase its GDP share from 10% to 15% over time, which indicates a possible addition of £142 billion to the economic landscape. Present industrial investment stands at £38.2 billion per year, and reshoring overseas operations is seen as a critical opportunity for growth.
Fhaheen Khan, a senior economist at Make UK, was positive about the potential benefits of the strategy, particularly its impact on the recruitment of high-skilled workers and the advancement of automation and digital technologies. Khan emphasized the need for the UK to act swiftly to maintain competitiveness with global counterparts such as the US, Europe, and China, who are aggressively investing in green technologies.
The survey results highlight a strong demand for increased investment in UK facilities, automation, research and development, and a focused effort to boost exports, especially with the European Union, in the post-Brexit environment. Fiscal incentives are at the forefront of manufacturers’ priorities. Over half of the respondents indicate that a reduction in corporation tax would significantly enhance investment, alongside expanding capital allowances to software and extending full expensing to leased and second-hand machinery.
Interest rates remain a formidable challenge for manufacturers as they strive to capitalize on Labour’s industrial ambitions. There is sector-wide optimism for potential Bank of England interest rate cuts, which could alleviate some of the financial hurdles faced by companies. Furthermore, aligning with international efforts in green technologies is deemed critical for sustaining the UK’s long-term competitiveness on the global stage.
The endorsement of Labour’s strategy by Make UK demonstrates significant potential for reshoring and industrial growth, provided economic challenges are addressed.
