Manufacturing hits the buffers as tax and cost increases bite

17 March, 2025

In response to this much weaker picture, a separate survey by Make UK in response to the measures announced in the Autumn 2024 Budget showed almost half of companies (48%) are freezing recruitment and four in ten (41%) will reduce planned pay increases. Worryingly, around a quarter (27%) are considering redundancies. Furthermore, a third of companies (34%) are delaying investment plans, while 15% have cancelled planned investments altogether.

As well as the impact on companies from increased employment costs, with more than 9 in 10 companies expecting them to increase this year, the survey also showed the scale of increases hitting companies from other business costs. Almost three quarters of companies (70%) expect their energy costs to go up this year, with a similar number (71%) seeing their logistics and transportation costs go up. Almost eight in ten (79%) are seeing raw material costs increase.

Make UK is now forecasting that manufacturing will contract by -0.5% in 2025, down from a forecast of -0.2% in the last quarter, before growing by 1% in 2026. GDP is forecast to grow by 1% in 2025 and 1.5% in 2026.

The Manufacturing Outlook survey of 306 companies was carried out between 13 and 27 February.

The Budget impact survey of 256 companies was carried out between 28 January and 11 February.

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