Manufacturing Outlook 2025 Q1
17.03.2025
Britain’s manufacturers have hit the brakes on recruitment and investment plans amid rising employment taxes and business costs, according to Make UK and BDO’s Q1 2025 Manufacturing Outlook report.
It reveals that the final quarter slump in business confidence in 2024, the fastest rate of decline since the pandemic, has now translated into a fall in both output and orders in Q1 2025. It is the first time in a decade that output has fallen in the first quarter of the year, as both domestic and export orders have slowed.
In response, half of companies have frozen recruitment efforts, with more than a quarter considering redundancies. A third of companies have also delayed investment plans.
These factors have led Make UK’s economics team to downgrade manufacturing sector growth forecasts for this year, with an expected contraction of -0.5% in 2025, down from the previous forecast of -0.2% in the last quarter, before growing by 1% in 2026.
Manufacturers feel like they are currently wading through treacle, facing barriers and increased costs being imposed on them at every turn. However, there is no more resilient a sector in the economy and, just as they have done in the past, they will find ways to adapt.
“The one light at the end of the tunnel is the prospect of a modern, long term industrial strategy which will enable them to plan for the future with confidence in a supportive policy environment. But, this cannot be a case of more jam tomorrow, come the summer it has to be a case of jam today.
Against a backdrop of economic uncertainty, the manufacturing sector has relied heavily on exports to help protect it from other downward trends. As this data shows, we cannot be complacent - our manufacturers are resilient but they’re not invincible.
“While there are pockets of investment and opportunity, output levels are down across the board and, in order for manufacturers to continue their push on growth, they need targeted support from government, whether that be reducing complexity, streamlining trade or boosting access to capital.
The Manufacturing Outlook survey of 306 companies was carried out between 6 and 20 February.