Manufacturing Outlook 2024 Q4
16.12.2024
Business confidence among Britain’s manufacturers has dipped at the sharpest rate since the onset of the pandemic in response to rising costs, according to Make UK and BDO’s Manufacturing Outlook Q4 2024 report.
In its final edition of the year, the report finds that the mood among companies has deteriorated considerably since the last survey in Q3, when almost six in ten companies saw a brighter economic outlook under a new Government.
70% of manufacturers told us that they have seen their costs already increase by up to a fifth in the last year, while almost one in ten had seen their costs increase by up to a half.
In particular, the survey shows almost nine in ten companies (86%) will see their business costs increase due to the Make Work Pay reforms, with almost half of companies (44%) saying the increase will be ‘significant’.
In other news, output and order levels have remained positive, with recruitment and investment intentions stable. However, with substantial extra business costs set to be added to those that companies were already facing, particularly the changes to National Insurance Contributions, Make UK has revised its sector growth forecasts, with a -0.2% contraction in 2024 and growth of just 0.7% in 2025.
Having faced a cost creep for most of the year, manufacturers are now facing a cost crisis which has brought a sharp dip in their confidence. While overall conditions had begun to gradually improve during the year, the Budget has brought this to a shuddering halt, with the substantial increase in National Insurance Contributions potentially the straw that might break the camel’s back for some.
“There is now an urgent need for Government to look at other measures which might mitigate the impact of the rocketing costs that businesses are now facing.
While manufacturers have welcomed the Government’s Industrial Strategy green paper, optimism across the sector is declining, driven by increased input costs, the implications of the latest budget on employment costs and lacklustre domestic demand.
"An overlay of a turbulent geo-political landscape and talk of potential tariffs adds to future uncertainty in the short to medium term. Increasing investment in improving productivity is vital now more than ever to maintain stability and offer opportunities for growth in the sector.
