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Manufacturers call for quicker support package amid worsening forecasts

By Sam Pither
20 June 2022

A Make UK/BDO survey has shown manufacturing orders and exports nosediving in the South East, leading to calls to bring forward the help scheduled for autumn.

According to Make UK, the seriousness of the situation and the prospects for the next six months means the industry cannot wait for autumn, when the support package announced in the spring budget is due to be made available.

Considering the South East is usually one of the country’s strongest performing regions, its economic downturn may be a worrying indicator of wider problems.

In order to try and stem the tide, Make UK has made the following recommendations:

  • Waive or reduce business rates for the next 12 months
  • Implement VAT deferrals for larger businesses and waive completely for SMEs
  • Temporarily freeze the Climate Change Levy and, if energy costs continue to rise, remove it completely
  • Review the efficacy of the business interruption loan schemes introduced during the pandemic and deploy a successor scheme by Q3
  • Extend the super-deduction investment policy
  • Make the increase in the Annual Investment Allowance permanent

Jim Davison, Director for the South East of Make UK, said: “Whilst industry has recovered strongly over the last year we are clearly heading for very stormy waters in the face of eyewatering costs and a difficult international environment.

 “Clearly some of the factors impacting companies are global and cannot be contained by the UK Government alone. However, just as it is quite rightly taking measures to protect the least well off, it must take immediate measures to help shield companies from the worst impact of escalating costs and help protect jobs.”

Read more - Make UK/BDO report highlights importance of manufacturing to South East

The survey showed that total orders dropped substantially from the last quarter (+25% from +34%) and although the UK and overseas markets are still positive at +14% and +13% respectively they have both slowed notably, reflecting the national outlook.

These negative expectations are being reflected in hiring, with recruitment intentions dropping to just +7%, the lowest for a number of years. Investment intentions remained reasonably healthy, however, bucking the national trend.

Make UK has forecast growth for manufacturing in 2022 of +2.3% (down from 3% in Q1 and 3.3% in Q4 2020) and 1.7% in 2023.

Mark Hutton, Head of Manufacturing at BDO in the South East, added: “South East manufacturers have shown their ability to overcome a wave of challenges over the last couple of years to remain competitive.

“Rapidly rising input costs, ballooning energy bills and in some cases inflation-busting pay settlements have hit margins and slowed investment plans. There is now a strong case for Government action to help manufacturers weather the immediate storm and incentivise investment for long-term growth.”

Read more - Top 10 manufacturing SMEs in the Surrey, Kent and Sussex

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