The latest Make UK/PwC UK Senior Executive Survey indicates that the Industrial Strategy is projected to support manufacturing growth; however, rising costs remain a significant concern.
Manufacturers in the United Kingdom anticipate that the implementation of an Industrial Strategy and individual sector initiatives will be pivotal for their growth prospects by 2026. According to findings from a major survey released today, the majority of respondents believe that current opportunities outweigh risks for their businesses.
The data is drawn from the annual Make UK 2026 Senior Executive Survey, conducted in partnership with PwC UK, which evaluates opportunities, challenges, and risks facing manufacturers in the coming year and assesses both domestic and international economic outlooks.
While industrial strategies and sector plans present clear benefits, the survey highlights ongoing challenges associated with rapidly increasing costs. Despite these pressures, most companies maintain that the UK remains competitive as a manufacturing hub.
Make UK has cautioned that escalating business costs—most notably in employment and energy—risk reaching a threshold where investment may be cancelled or redirected abroad. Accordingly, Make UK urges the Government to accelerate industrial strategy implementation and to advance the proposed business energy support scheme, broadening its scope to benefit as many companies as possible. Further, Make UK advocates for enhanced stability and transparency in future employment legislation and cost structures, given the impact of National Insurance Contribution increases and the Employment Reform Bill on recruitment.
Stephen Phipson, Chief Executive of Make UK, commented: “UK manufacturers have consistently demonstrated resilience through recent challenges. Those who invest in innovation, new technologies, market expansion, and workforce development are positioned to prosper. However, success is contingent on operating within a favourable business environment. Although there is commitment to an industrial strategy, growth remains subdued and signs are emerging that the UK’s competitiveness as a manufacturing and investment destination is under threat. The Government must act decisively to deliver promised reforms.”
Cara Haffey, Leader of Industrials and Services at PwC UK, remarked: “UK manufacturers are resolute in their ambitions for growth. The Industrial Strategy is a central driver of this optimism, though tangible benefits will require time to materialise. Nonetheless, the sector must continue to evolve; those prioritising product innovation, technological adoption, and marketing investment will be best equipped to achieve sustained growth.”
Survey results show that 57% of respondents expect long-term industrial strategies and sector-specific plans to be the leading factors affecting growth this year, with nearly two-thirds (63%) indicating plans to expedite investment. New product development is a top priority for 80% of companies, while 76% plan investments in digital technologies, artificial intelligence, and automation. Over half (55%) aim to broaden their product portfolios, and 42% intend to expand exports into new markets. Increased adoption of AI corresponds with 37% of companies identifying marketing as a key growth area.
The principal challenge identified is widespread cost escalation: 86% of companies anticipate higher employment costs, 79% foresee greater material and input costs, and 67% expect increased business rates. Make UK emphasised that although some cost pressures are global, domestic employment and other business costs could precipitate investment withdrawals or relocations. The sector’s sentiment is reflected in responses: 60% reported they would reduce or cancel investment if business tax increases were confirmed in the Budget, and 57% would consider shifting investment overseas.
Additionally, while 57% of businesses perceive the UK as competitive for manufacturing, 26% view it as uncompetitive. Among non-UK enterprises, opinions on the UK as an investment destination are divided, with 41% considering it attractive and 39% regarding it as unattractive.