The manufacturing sector remains resilient given everything that its been through
· Posted on: July 8th 2025 · read
The UK’s manufacturing sector has been beset by shocks over the last decade, from Brexit, Covid, supply chain shortages, the war in Ukraine, high energy prices, through to Trump’s tariffs.
Add in recent government own-goals like National Insurance rises, and many firms have felt hammered by a ‘perfect storm’.
Simultaneously, manufacturers are grappling with a ‘triple transition’ embracing Net Zero, Industry 4.0 and the accompanying skills revolution, all requiring substantial investment.
What’s fascinating about the latest MHA survey is not only the nature of challenges that firms face – whether skills or supply chain issues or cyber-security - but also how resilient the sector remains given everything that has hit it.
Many manufacturers still expect to grow, and some quite quickly. Let’s face it, to have survived as a UK manufacturer given all that has happened, firms do really have to be fundamentally world-class at what they do.
The eagerly-awaited industrial strategy should help. Delayed over concerns that it did not do enough to address big cross-cutting issues like energy costs, innovation and training, the new strategy at least points in the right direction.
Actually having a strategy for a start is welcome. Outside the UK, industrial strategy is back, and in a big way. The UK has had numerous strategies before but the last effort was ditched by Boris Johnson who wasn’t a fan.
And having an Industrial Strategy Council to oversee the strategy is a welcome move. The Council can potentially hardwire the idea of strategy as a partnership between the state and business. This isn’t meant to be a top-down, ‘picking winners’ approach of old but rather a collaborative effort to discover new opportunities and challenges and to develop new policies accordingly.
The strategy also hasn’t shied away from some of the big issues.
A big strength this time round is that a focus on place and tackling regional inequality is a main objective.
The strategy also hasn’t shied away from some of the big issues.
For too long, the economic growth in Britain has been disproportionately concentrated in London and the Southeast, leaving other regions as ‘left behind places’. A focus on empowering local leaders to shape industrial policies tailored to their specific needs is welcome.
The emphasis on energy and infrastructure is also much needed. The UK’s infrastructure is in dire need of modernisation. Improved connectivity could boost productivity spillovers across space, reduce economic disparities between different regions, and attract investment in those left-behind places.
The Strategy places a big emphasis on innovation and research and development, particularly in emerging industries such as artificial intelligence, robotics, and clean energy technologies. If successfully implemented, this could help the UK build an industrial base that is not just competitive but also resilient to the kind of technological disruption envisaged in Industry 4.0.
The strategy’s focus on clean growth is also timely. As the world is forced to face the realities of climate change, the UK’s industrial future must be sustainable.
This is reflected in proposals for reducing carbon emissions and developing green technologies. By prioritising clean energy and promoting investment in sectors like electric vehicles and renewable energy, the strategy aligns with goals for achieving net-zero emissions by 2050.
The UK’s infrastructure is in dire need of modernisation.
And yet.
While the Strategy has much to offer, there are concerns about whether it really addresses some of the deeper systemic issues facing the UK manufacturing.
The ‘Elephant in the Room’ is of course Brexit. Post-Brexit non-tariff barriers have disrupted UK trade with the EU and continue to act as a drag on UK growth.
The Strategy offers little clarity on how industries that have been deeply integrated in EU supply chains and markets, such as advanced manufacturing and automotive, can actually thrive outside of the European Union.
Our specialist insight
"While the recent ‘reset’ with the EU was welcome, the UK government’s red lines over not joining the Customs Union and Single Market left manufacturers still facing significant non-tariff barriers to trade. Much more needs to be done to help boost British manufacturing exports."
