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.