Manufacturing sector in the UK continues to invest and recruit despite a challenging forecast
26 March 2024
The latest survey by Make UK's Manufacturing Outlook 2024 Q1 revealed that manufacturers in Britain will likely experience two years of sluggish growth. Forecasts show that the sector's growth rate will remain at a low of 0.1% this year before increasing by 0.8% in 2025. This is just half of the expected GDP rate for the overall economy.
Despite the challenging forecast, the manufacturing sector in Britain has shown remarkable resilience. Companies remain confident and optimistic, with investment and recruitment intentions displaying a positive trend surpassing Q4 2023. These findings have been reaffirmed by the GC situation report and Quarterly Business Survey (Dec 2023 to Mar 2024). A total of 52% of firms in Greater Manchester are expected to increase Capex spending in the year ahead, compared to 48% previously. Furthermore, 27% of firms surveyed are recruiting new staff, up from 25%.
Whilst the output balance experienced a significant decline towards the end of the previous year, there is strong potential for recovery in the near future. Total orders, though stable during the same period, are also expected to show improvement in the coming three months.
During the previous quarter, orders from the UK and exports remained flat. However, both of these levels are expected to improve in the future. Furthermore, the trend of UK orders surpassing export orders since the pandemic began is expected to continue, with a brief reversal in Q4 2023.
PM announced a reform on Apprenticeships
One of the key challenges for the manufacturing sector is the availability of skilled labour and it is so important for our younger generation to be properly trained in the real work environment. In his first economic speech since the Spring Budget, Prime Minister Rishi Sunak announced on 18th March at the Business Connect conference in Warwickshire a series of reforms, including fully funding young people’s training and reducing red tape for small businesses, that aim to create up to 20,000 additional apprenticeships.
Underpinned by £60 millions of new investment for next year, the government will fully fund the cost of apprenticeships for individuals under 21 years of age who work in small businesses starting from April 1. This initiative aims to ease the financial burden on employers and provide more young people with access to professional training opportunities.
Starting in April, the government will also increase the amount of funding employers who pay the apprenticeship levy can pass onto other businesses. Large employers who pay the apprenticeship levy will now be able to transfer up to 50% of their funds to support other businesses, including smaller firms, in taking on apprentices. The new policy will enable SMEs to hire more apprentices by reducing costs and enabling them to get the skilled workers they need.
Collectively, these actions are anticipated to facilitate the creation of up to 20,000 additional apprenticeships, primarily for young individuals. Mr Sunak expressed that “these measures will unlock a tidal wave of opportunity and make a real difference to businesses and entrepreneurs across the country.”
The backbone of our economy
“Despite facing unprecedented challenges and difficulties, manufacturing businesses in the UK have shown remarkable courage and determination, continuing to play a crucial role as the backbone of our economy. By generating wealth for society and creating job opportunities, especially for the younger generation, they continue to thrive,” said Anne Campion, Head of Manufacturing, GM Business Growth Hub.
“The PM’s announcement is a timely support for our manufacturers and young people. As the business support organisation for Greater Manchester, GM Business Growth Hub welcomes the government’s reforms and is committed to helping communities across our city region by unlocking the potential in businesses that want to achieve more.”
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