The UK manufacturing sector is predicted to experience a 3% contraction in 2023, with rising costs set to continue ‘across the board’, according to research by Make UK.
Make UK’s latest quarterly Manufacturing Outlook survey predicts that the sector has shrunk by 4.5 per cent already this year – although this is relative to a strong 2021 that was buoyed by the pandemic bounce back.
The organisation has been consistently revising down its forecast for manufacturing growth throughout 2022, from 3 per cent in March to 1.7 per cent in July, 0.6 per cent in September and now -4.5 per cent in December.
Unfortunately, the deteriorating economic conditions at home and abroad are expected to continue well into 2023, putting a full-blown recession on the cards for the nation’s manufacturers.
In particular, key sticking points such as rising energy prices show no signs of alleviating in the foreseeable future. With the Energy Bill Relief Scheme ending in its current guise in March 2023, a separate survey of 700 businesses by the CBI suggests firms expect their energy costs to more than double if government support was no longer available to them.
Speaking to BBC News in December, the boss of Italian energy giant Enel, Francesco Starace, warned that it would take “years” for global energy prices to return to pre-Ukraine war levels.
Stephen Phipson, Chief Executive of Make UK, commented:
“There is simply no sugar-coating the outlook for next year and possibly beyond. Even for a sector as resilient as manufacturing these are remarkably challenging times which are testing even the best and most successful of companies to the limit.
“As a result, 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.”
SME manufacturers in Greater Manchester can access tailored one-to-one advice from our specialist Manufacturing Service in 2023. Prepare now by booking in a meeting with an Advisor today.