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10 July, 2022 - 16:08 By Tony Quested

BDO and Make UK demand government action to ease manufacturing crisis

The Make UK/BDO Q2 Manufacturing Outlook survey showed growth and orders slowing significantly, exports almost at a standstill and investment nosediving as companies cut or postpone their plans in order to maintain cashflow.

The seriousness of the situation and the prospects for the next six months, means that industry cannot wait for the promised help in the Autumn which the Chancellor made in the Spring Statement, with action required urgently before the summer recess.

In response, Make UK has made a number of recommendations for measures Government can introduce now to address rising business costs including the following:-

  • Waive or reduce business rates for the next 12 months
  • Implement VAT deferrals for larger businesses and waive completely for SMEs
  • Temporarily freeze the Climate Change Levy and, if energy costs continue to rise, remove it completely
  • Review the efficacy of the business interruption loan schemes introduced during the pandemic and deploy a successor scheme by Q3
  • Extend the super-deduction investment policy
  • Make the increase in the Annual Investment Allowance permanent.

In addition to immediate measures, Make UK also stressed that the Government must move away from short-term, gesture politics. Instead, it must focus on demonstrating to business and, foreign investors, that it has the capacity to operate in a serious manner with a long-term vision befitting a modern and outward looking Britain.

Stephen Phipson, chief executive of Make UK, said: “Whilst industry has recovered strongly over the last year we are clearly heading for very stormy waters in the face of eyewatering costs and a difficult international environment. This threatens to shatter expectations of a sustained recovery from the pandemic.”

Keith Ferguson, Head of Manufacturing at BDO in the East of England, added: “Manufacturers have shown their ability to overcome a wave of challenges over the last couple of years to remain competitive. 

“The question is when fatigue will overcome resilience. The tipping point where the shorter term need to retain cash outweighs investment is starting to be reached and could have significant implications for future growth.

“Rapidly rising input costs, ballooning energy bills and in some cases inflation-busting pay settlements have hit margins and frozen investment plans. There is now a strong case for Government action to help UK manufacturers weather the immediate storm and incentivise investment for long-term growth.” 

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