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Britain’s manufacturers are set to plunge into recession next year as the deteriorating economic conditions at home and abroad exert a vice-like grip on the sector, with increasing costs across the board, tighter fiscal and monetary policy and weakening consumer demand forming a perfect storm.

The Make UK/BDO Q4 Manufacturing Outlook survey shows manufacturing is forecasted to contract by -3.2% in 2023. This comes on the back of a forecast -4.5% contraction this year, the number for this year is relative to a very strong 2021, which reflected the pandemic bounce back.

Make UK has consistently been revising down its forecasts for manufacturing growth in 2022 throughout this year from 3% in March to 1.7% in July, 0.6% in September and now, a contraction of -4.5% 1, it highlights the extent to which conditions for the sector have weakened significantly, especially in the final quarter of the year.
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.

However, the bigger issue is that the UK risks sleepwalking into an acceptance that little, or no growth is the norm. Government needs to work with industry as a matter of urgency to deliver a long-term industrial strategy that has growth at national and regional levels at its heart.
Stephen Phipson Chief Executive, Make UK
Manufacturing input prices are growing rapidly, so it is little wonder UK manufacturers are having to pass the costs onto their customers in order to remain viable.

Without the right government support and reassurance, manufacturing businesses will be inclined to retain cash to keep the doors open, rather than invest cash in future growth and competitiveness of the sector. There is little clarity on how the new government plan to build the right longer-term environment in which the sector can effectively plan.
Richard Austin National Head of Manufacturing, BDO

1 The -4.4% forecast for manufacturing this year also reflects revisions to the blue blook methodology which have led to significant changes to the direction of manufacturing output, particularly since 2020. The data suggest that manufacturing has continued to decline since a high point in Q2 2021.


Available resources

Industry report / Make UK