UK (Washington Insider) – Britain’s manufacturers ended
2025 cautiously positive, with output +13%, orders +3%, forecast rising; Make
UK/BDO survey highlights £44bn investment potential, 0.5% growth, and comments
from James Brougham, Richard Austin.
As John Hunter on Machinery Market reported, Britain’s
manufacturers ended 2025 on a more positive note, with output still growing as
strong domestic orders supported activity, according to the latest Make UK/BDO
Q4 Manufacturing Outlook survey published today, Dec 15, 2025. They mentioned
that the study shows that demand at home helped firms close the year on firmer
ground. However, it also points to rising caution across the sector.
Recruitment plans weakened sharply as companies reacted to
uncertainty ahead of last month’s Budget, with concerns over possible tax
increases and higher labour costs. Business confidence fell for the 2nd quarter
in a row. Make UK and BDO said the improved end to the year should not be seen
as the start of stronger trading conditions. Forecasts remain weak, with
manufacturing output expected to grow by only 0.5% in 2025 before falling by
0.5% in 2026.
What is driving UK manufacturing growth and £44bn investment
by 2035?
Make UK also released new figures on the UK’s long-term investment
gap and the potential gains from closing it. The analysis shows that UK
investment averaged about 17% of GDP between 2013 and 2024, compared with an
OECD average of around 22% over the same period.
The group said that if the government set a long-term target
to match OECD levels by 2035, this could be achieved by increasing investment
by 0.5 percentage points each year. Reaching the 22% level would result in
around £670 billion in additional public and private investment over the next
decade, according to Make UK.
The latest analysis shows that the private sector could
provide around 60% of the additional investment if the UK reaches OECD levels
by 2035. James Brougham, senior economist at Make UK, said:
“After a difficult 12 months when manufacturers have
faced multiple challenges across all fronts, it is a relief to see the year
ending on a more positive note. However, the prospects for any form of
significant growth remain remote and, with rising employment costs and any help
on energy still well over the horizon, companies will have little inclination
to fill up the punch bowl to start the party.”
Richard Austin, head of manufacturing at BDO, said:
“it is now essential that the Government brings
forward the proposed energy support scheme and, at the same time, extends it
right across the sector so the broadest possible range of companies are
covered. With firms set to take a hit on increased employment costs employers
also want to see reassurances from the Government that the upcoming Employment
Rights Bill will not add further financial burdens on businesses, otherwise the
jobs market will remain weak.”
“This year has been a volatile one for UK
manufacturers. While the last six months have shown tentative signs of growth
in output and orders, the sector is lacking the confidence and assurance they
need to put their hands in their pockets and invest.
Last month’s Budget gave
manufacturers some relief in terms of investment, green transition and some
positive skills measures, but it fell short in addressing some of the biggest
concerns the sector is facing. Businesses need decisive action if growth is to
be realised.”
Manufacturers are
expected to contribute about 11% of that private share, which would add
roughly £44 billion to the manufacturing sector over the period. The Make
UK/BDO Q4 Manufacturing Outlook survey also shows that output growth slowed at
the end of the year.
The balance on output fell to +13% in the 4th quarter, down
from +25% in the previous quarter. Despite this slowdown, manufacturers are
more optimistic about the months ahead, with the forward-looking output balance
for the next quarter expected to rise to +19%.
There were also similar increases in the number of orders
received. The number of orders increased by +3% in Quarter 4 compared to
Quarter 3 (+16%). The expectation for the number of orders in Quarter 1 of 2020
is a recovery to +19%. Demand from both UK and overseas export markets is
expected to be equal at +20% in Quarter 4 2019. However, this situation will be
reversed after Quarter 4 2019, with forecasted Export orders reducing to +3%
and UK orders increasing to +27%.
The United States moved down from 2nd to 3rd position on the
Future Growth Opportunities list below both Asia and Oceania. The UK
manufacturers that previously were among the top three in Quarter 2, after the
April Tariff announcements, are looking.
Other regions in the world, like the UK, will be
increasingly active in looking for opportunities available outside of that
country and the USA. Furthermore, recruitment intent has dropped significantly
from +15% down to +3%, while investment intentions have decreased slightly from
+25% down to +19%. However, despite these changes, the levels of both remain
abovethose of earlier this year remain high.
