Today’s first Labour Budget since 2010 was an opportunity for the government to build on the initial proposals in the Industrial Strategy green paper to bolster the UK’s manufacturing industry and stimulate economic growth in line with decarbonisation. The Chancellor, Rachel Reeves, promised that the only way to ensure economic growth was to “Invest, invest, invest”.
The Industrial Strategy has identified eight high-growth sectors that will help drive the green economy and the supply chains that are powering them, and to this end the Chancellor commented: “Today’s budget marks an end to short-termism. For the first time, the Office for Budget Responsibility (OBR) has published not only five year growth forecasts, but a detailed assessment of the growth impacts of our policies over the next decade.
“To improve employment prospects and skills, we are creating skills England, delivering our plans to make work pay and tackling economic inactivity. We are also launching our long-term Industrial Strategy and expanding opportunities for our small and medium sized businesses to grow. And to drive innovation, we are protecting record funding for research and development to harness the full potential of the UK science base. And to maximise the growth benefits of our clean energy mission, we have confirmed key investments such as carbon capture and storage to create jobs in our industrial heartlands.”
After hitting out at the previous government’s record, the Chancellor also confirmed expected tax increases, by over £40bn, stating that: “Any Chancellor would face the same reality,” and that, “we cannot undo 14 years of damage in one go and so economic growth will be our mission throughout the duration of this Parliament.”
Initial reaction to the Industrial Strategy green paper raised concerns over a lack of focus for small businesses. This was picked up on by the Chancellor who added: “It is particularly important to protect our smallest companies. So having heard representations from the Federation of Small Businesses and others I am increasing the employment allowance from £5,000 to £10,500. This means 865,000 employers won’t pay any national insurance at all next year.”
There was also the announcement that over three million workers will receive a pay boost after the Chancellor confirmed the National Living Wage will increase from £11.44 to £12.21 an hour from April 2025. This offers a much-needed lift to the manufacturing industry, which is still struggling with labour shortages and stiff competition from other sectors, particularly around emerging digital skills.
As widely expected, the Chancellor also lifted employers’ National Insurance Contributions, but the drop in the threshold at which businesses start paying shifted from £9,100 to £5,000.
The Chancellor added: “To rebuild our country we need to increase investment. The UK lags behind every other G7 country when it comes to business investment as a share of our economy. It means the UK has fallen behind in the race for new jobs, industries and technology. Restoring economic stability by establishing the National Wealth Fund to catalyse private funding, we have begun to create the conditions that businesses need to invest.”
She continued: “We are driving forward our modern Industrial Strategy, working with businesses and organisations like Make UK to set out the sectors with the biggest growth potential. We are confirming multi-year funding commitments for these areas of our economy.
“This includes nearly £1bn towards the aerospace sector, inviting research and development and building on our industry in the East Midlands, the South West and in Scotland; over £2bn pounds for the automotive sector, our electric vehicle industry and to develop our manufacturing base, building on our strengths in the North East and the West Midlands; and up to £520m for a new life sciences and innovative manufacturing.
“And to bring new jobs to Britain and to drive growth across our country, we are delivering our plan to make Britain a clean energy superpower. Earlier this month, we announced a significant multi-year investment between government and business into carbon capture and storage, creating 4,000 jobs across Merseyside and Teeside. Today, I am also providing funding for 11 new green hydrogen projects across England, Scotland and Northern Ireland.”
The gender imbalance in the sector is well documented, with more women and girls needed to help fill the widening skills gap within manufacturing and engineering. In a similar, traditionally male-dominated sector, it was notable that the Chancellor gave mention to the fact that she is the first woman in history to deliver the Budget address saying: “To women and girls everywhere, let there be no ceiling on your ambitions, hopes and dreams.”
Industry reaction
“Today’s Budget was a budget for growth despite the extremely difficult circumstances the new labour government inherited. The Chancellor has performed a careful balancing act of moderate tax increases, productivity increases and borrowing to invest to put the British economy on a long-term route to growth.
“Labour’s modern Industrial Strategy sets out the sectors with the biggest growth potential. The Chancellor announced that the government will capitalise the National Wealth Fund to invest in the industries of the future. This is to be welcomed to ensure our economic resilience and economic security and increase our share of world trade.
“The announcement by the government that it will increase investment alongside business is to be welcomed. The announcement of an extra £1bn for the aerospace sector, £2bn for the automotive sector and £520m for life sciences will boost British industry at this critical time.
“Business taxes remain frustratingly high, and the government must work over the Parliament to reduce the rate of tax paid by businesses. The last government deterred investment because of its increases in corporation tax. There is some concern around the impact the increases in employers’ national insurance contribution could have on costs passed on in prices or in levels of employment.
“The key to growing the British economy is to make the country more competitive. This can be done as the Chancellor has sought to do through borrowing to invest, improving skills and training and improving the health of the nation through improved public services. However, the key to increasing competitiveness is making it profitable to invest in the UK.
“The government should commission a review into the use of a competitive exchange rate policy as a tool to drive economic growth. Planning reforms are essential, and it was good to see the Chancellor enforcing the Labour government’s commitment to reform the UK planning system.
“As part of that reform, we need to make it easier for companies to expand and built new plants and we need the transport connectivity to serve that industrial expansion. The planning reform agenda must work to improve planning for industry. The public finances are tight, taxes are high, productivity and growth are low. This budget goes some way to redress those problems but we will need to create an environment that incentivises investment, creates jobs and drives economic growth if the government is to achieve its national mission of improving living standards for all.”
“Overall, I think we have to be slightly relieved with the impacts of the Budget announcements and despite a 1.2% rise in employers NI increasing costs for businesses, we can be relieved that the impact and cost to business was not higher, and that the investment commitments announced will improve our public services, our crumbling infrastructure and present some opportunities for growth.
“Businesses have a limited budget for payroll and wages and while Labour are not increasing taxes for employees, the imposed increase in Employers National Insurance will ultimately impact employees by reducing the budgets available for pay and benefit increases.
“However, I am pleased to see the Employment Allowance increase from £5,000 to £10,500, which the Chancellor says will mean 865,000 employers won’t pay any National Insurance at all next year. This will potentially help many of the micro-businesses who grow to become our SMEs.
“I am also relieved to see there was no tax benefit removal or reduction on pension payments or salary sacrifice schemes which had previously been mentioned. This would have been a seriously damaging move and thankfully, those choosing to save for their retirement are protected for now.
“It is good to see the AIA and full expensing retained although it would have been good to see it being extended to second hand machinery and equipment and I’m sure the continued freeze in fuel duty is a relief for some of our supply chain partners.
“It was certainly refreshing to hear our industries and sectors mentioned within the budget and £3bn committed to for the aerospace and automotive sectors although how this is spent will be extremely interesting.
“Increasing capital gains tax on the sale of shares and assets was expected but the rise imposed is at least not the 40% expected and at least the Lifetime allowance and Business Asset Disposal Relief is retained.
“There were also some excellent commitments to infrastructure projects, both rail and road which are extremely welcome. While we appreciate that tax revenue must rise due to the current situation in the UK economy, we should be looking at ways to reduce costs in the public sector, and increase revenue generated by businesses, rather than taxing further those who generate it.
“I do hope that Labour will fulfil their commitment to reducing costs and increasing productivity in the public sector and I would hope a full review of business support funding, how its impact is measured and reported, and support delivery mechanisms costs are calculated and charged, is included within that review.”
“We welcome the Chancellor’s commitment to invest in education and skills as a central pillar of the government’s growth agenda, not least through the creation of Skills England and the announcement of a £40m pot to develop new foundation and shorter apprenticeships in key sectors. We look forward to continuing to support the government to develop a new Growth and Skills Levy, ensuring an apprenticeships system that provides ample routes into engineering and technology careers for young people.
“The pledges of significant funding uplifts for school budgets and further education colleges will be key to addressing the teacher recruitment crisis, which is particularly acute in STEM subjects. To resolve the teacher workforce crisis in the long-term, this must be accompanied by a similar commitment to teacher retention, such as by reversing short-sighted cuts to subject-specific CPD for STEM teachers.
“Moreover, the announcement of a series of new energy and infrastructure projects, such as green hydrogen plants and carbon capture and storage facilities, underscores the centrality of ensuring an engineering and technology workforce that is fit for the future to achieve the Government’s mission of turning the UK into a clean energy superpower.
“Ahead of the publication of the full Industrial Strategy next spring, we look forward to supporting the government with the development of sector plans for key growth-driving industries, many of which depend heavily upon the supply of skilled engineers and technologists.”
“This Budget was always going to involve tough choices for business as the Chancellor grapples with the state of the nation’s finances whilst, at the same time, improving the foundations of the economy. However, there is no escaping the fact that raising Employer National Insurance contributions and, the surprising change in thresholds, at a time of other cumulative increases in employment costs will be challenging for many businesses and especially SMEs.”
“However, looking at the bigger picture and, the medium to long-term, we welcome the government’s clear path to growth for manufacturing with a number of positive measures. In particular, the commitment to an Industrial Strategy, the Corporate Tax Road Map and, continued support for vital programmes such as Made Smarter, are key elements of a growth plan which will enable UK manufacturing to make significant progress over the coming years.
“The UK has long been an outlier in not having a industrial strategy at the heart of its economy. There can be no doubt that advanced manufacturing now has a critical part to play in driving growth across all regions of the UK. The commitment to a long-term industrial strategy by this government is to be celebrated. It will deliver growth, investment and high-quality jobs.”
“After the announcement of the Industry Strategy Council, government now needs to move at pace to formalise the creation of the individual sector groups so that the formal strategy and more detailed plans can be brought forward.”
“Driving investment and growth is critical to ensuring the continued success of the UK’s largest manufacturing sector, and protecting the nation’s food security. So we welcome the Chancellor’s focus on a consistent, long-term approach to tax and regulation, which should help unleash the growth potential of the food and drink manufacturing industry’s 12,500 businesses.
“As a critical advanced manufacturing sector, we stand ready to work with government to make the most of this support. Boosting investment in R&D will help the industry to create jobs, drive innovation, and grow export opportunities – resulting in a stronger industry that underpins the nation’s food security.”
“Food and drink manufacturers want and need a circular economy for packaging recycling, so it’s great news that the government will enable companies to use mass balance accounting. This important change will open up new markets for advanced recycling in the UK, creating green jobs and investment opportunities, while increasing the amount of recycled content used in food-grade packaging.”
“The Chancellor is right to set out measures to address the deficit while investing for future growth. The automotive industry is a growth-driving sector, fundamental to the delivery of the country’s net zero ambitions. We therefore welcome today’s commitment of £2bn of automotive transformation funding as part of the government’s modern Industrial Strategy.
“Delivering that strategy depends on the UK being globally competitive. Additional National Insurance Contributions will put massive pressure on the automotive supply chain which is predominantly SMEs. Next year’s spending review must find resources to fund measures that alleviate the strain on these companies and help them transition to an electrified future.
“A strong manufacturing sector depends on a strong market. The lack of substantive measures to support the new car market – in particular for electrified vehicles – is hugely disappointing. We welcome the extension of the Plug-in Van Grant and company car tax benefits, but these alone cannot drive the growth in demand needed. With the sector challenged to deliver the world’s most ambitious EV transition targets, achievement of those targets is in serious doubt. There must be an urgent review of the market and regulation, else the cost will soon be felt in reduced UK investment, economic growth and jobs.”
“The Chancellor’s commitment to high-growth sectors like aerospace and automotive reaffirms the important role these industries play in strengthening the UK economy. With protected investment in research and development to support advanced manufacturing, innovation can be nurtured right from the drawing board to the production line.
“Manufacturers will now be eager for the forthcoming industrial strategy to provide the right conditions to supercharge investment in new technologies, as well as the skills needed to anchor emerging sectors in Britain. This is what we need to push the boundaries of UK manufacturing, as well as to drive productivity and global competitiveness.”
“This budget is full of difficult choices but within it there are real benefits for UK industry.
“The government’s commitment to the world’s first commercial scale green hydrogen projects has moved us a step closer to unlocking the $1tn global hydrogen technology market.
“By investing £1bn in aerospace, £2bn in automotive, £500m for life sciences and £6.1bn to protect core research funding in engineering, biotechnology and medical science, the government is cementing the UK as an advanced manufacturing nation. From these foundations we can build a dynamic and ambitious new industrial strategy.”
“The Industrial Strategy published on 24 October 2024 handed the manufacturing sectors most of what we have been calling for – a considered list of government priorities and a narrative that conveys a sense of certainty about where their attention will be in the coming months and years. For the manufacturing sectors, today’s Budget announcements should be analysed, with one eye on the detail of what was contained within the government’s Industrial Strategy ambition for our sector.
What manufacturers need, from both the Industrial Strategy and today’s Budget announcement, is to be recognised properly, supported permanently and enabled financially. The word ‘manufacturing’ appears 39 times in the Industrial Strategy but far less in the wording of today’s Budget. Support for manufacturing within the Budget should focus on the facts of our sector. It’s harder to make a profit in the UK as a manufacturer than it is in countries where the workforce, energy and material costs are all lower. A Budget that recognises these three challenges would help bring about growth of those businesses that are already thriving, despite them.
“The next few months will inform whether this Budget’s ‘tax and spend’ plans for the broader economy make things easier or harder for manufacturing companies to thrive, employ the right people and to carry on making the goods that are essential for the sustainable growth of the British economy.
“We know that buying British-made goods is good for the economy and society. It would be helpful for manufacturing businesses if the economy rewarded responsible British- based manufacturers, with considered fiscal incentives, calculated to help them grow.”
“It’s a budget that unfortunately I think we were all expecting and has done little to reassure businesses that Labour understands what the economy is all about.
“We’re a high-tech company, who export globally and have created 25 jobs – we should be the poster boy for what ‘growth’ looks like, yet I find myself this afternoon questioning whether the government actually wants firms like RYSE 3D based here.
“There’s no question we will succeed, and we will grow, but it will be despite policy, tax rises and worker reforms, which will shackle employers and force us to consider investment and recruitment decisions going forward.
“The ‘working person’ line really infuriates too. Like so many entrepreneurs across the country, I work probably 70-hours plus per week looking to grow the company and create employment for people in places I call home. It’s bloody hard work, but I want us to be a company that is the best in the world, so I find it ridiculous that you are punished for being aspirational.
“The Capital Gains Tax increase will simply turn future entrepreneurs off, there is no question about that. Where is the incentive to take risk, where is the incentive to put so many hours into growing something, where is the incentive for growth Mr Starmer?”
“The autumn Budget has confirmed some positive changes on the horizon for the manufacturing sector. The proposed business tax roadmap offers a structured, long-term plan, so manufacturers can make better-informed investment decisions with clarity on tax policies, including capital allowances and reliefs for innovation, which have been sought after for years by industry leaders. Concern remains for smaller manufacturers who are still recovering from persistent economic headwinds and may not find the roadmap offers the support they need right now.
“The extension of R&D tax reliefs with anticipated enhancements for SMEs in high-tech manufacturing is another victory, alongside confirmation of £2bn in R&D funding for the automotive sector, and £975m for the aerospace sector. SMEs bring agility and specialisation across industries and their contribution to growth and innovation should not be overlooked. These additional R&D supports can catalyse our transition to a more advanced manufacturing environment, including the adoption of Power Electronic, Machines and Drives (PEMD) technologies, which are critical in driving productivity, innovation and electrification across manufacturing, including aerospace and automotive.
“The expanded capital allowances for low-carbon technologies are pivotal for helping manufacturers cut emissions while improving efficiency. What we’d like to see is further detail on how smaller manufacturers can access support without the capital that larger corporations have to invest in new technologies
“For education, targeted investments in skills and training address one of the sector’s most pressing challenges. By increasing apprenticeship support in engineering and digital manufacturing, we’ll be better equipped to bridge skill gaps and attract the next generation of skilled workers. We hope that there can be more consideration for experienced workers who we want to ensure are taken along this journey.
“Overall, this Budget represents a strong indication that the government is invested in the future of UK manufacturing and a commitment to fostering growth and sustainability within the sector. We hope this is further complemented by the forthcoming Industrial Strategy.”
“It was clear that this was going to be a Budget that required difficult decisions. Against the backdrop of a challenging economic environment, reaffirmed commitments and ongoing support for R&D, funding for the aerospace and automotive sectors and the extension of Made Smarter are very welcome. Technology is a key enabler for growth and the UK must digitalise to become more competitive and sustainable, something that the government clearly recognises.
“The key now is ensuring that all new funding raised is deployed in the most effective way. While details on the government’s Industrial Strategy and Infrastructure Plan are to come, we’d urge government to continue to work closely with businesses to deliver on its ambitious growth mission.”
“We welcome moves to support new green hydrogen projects alongside previous commitments to deliver carbon capture and storage initiatives.
“It’s vital that we ensure spending supports a whole-systems approach to energy as demand for electricity grows. This is particularly critical in scaling key sectors like technology and manufacturing, which are naturally energy intensive.
“To do this, industry and government must work together to establish smarter energy transmission and distribution. This will support place-based investment in local projects and provide the landscape needed to truly modernise for a digital future.”
“While we are disappointed that the VAT on repairs remains, the CLEAR group and Trojan Electronics will continue to advocate for sustainable change within the sector. The high cost of repairs remains a barrier for many consumers, and we believe reducing or removing VAT on repair services would encourage the sustainable choice of fixing rather than replacing broken electricals.”
“This budget was a missed opportunity to make repairs more affordable for the public. However, we remain committed to advancing our work with the CLEAR group, pushing for broader support from policymakers to make sustainable repair solutions a priority for both the environment and consumer savings.”
“Further taxing non-draft alcohol hurts everyone; While the government is working hard to plug the hole in the country’s finances, the consumer is being further penalised despite already bearing the weight of the cost-of-living crisis, and much of the drinks industry will once again have to prove its resilience despite being positioned to drive economic growth.
“The move is damaging to the industry and a setback to firms across the board who have worked tirelessly in recent years to withstand relentless taxation in the toughest of trading conditions.”
“It was a very difficult conundrum to navigate, and it appears that businesses are picking up the majority of the tax burden.
“The increase in national minimum wage has the potential to squeeze other pay levels within companies and that – when combined with the employer NI contributions – will ramp up costs and put additional pressure on bottom lines throughout the country.
“There is little scope for manufacturers to pass these on, so it will be a case again of looking how we work smarter and if we go through with planned investment and recruitment.
“With my glass half full, I’m hoping that the impact of these tax rises will hopefully be partly offset by the market reacting positively to the delivery of a fully costed and balanced budget.
“This in conjunction with current lower rate of inflation, should provide the opportunity for further imminent interest rate cuts and a little bit of relief to SMEs keen to grow but continually squeezed by external pressures.”
“Providing financial incentives for innovation and investment is crucial for fostering growth and resilience in the current economic climate so it was positive to see this is a priority for the government.
“However, I urge the government to ensure that these initiatives are accessible and straightforward for businesses like ours to navigate. It’s vital that any support translates into tangible benefits on the ground. Additionally, addressing the rising costs of energy and materials remains a priority for many of us.”
“This budget was always going to impose additional pressure on businesses that have already faced significant challenges since the pandemic. It didn’t disappoint with the increase in minimum wage and employer National Insurance contributions sure to squeeze bottom lines even further.
“In truth, it will probably compel a lot of companies to look at ways where they can enhance existing productivity and adopt better working practices – two measures that will lead to stronger businesses but may not necessarily result in the job creation that Labour are so desperately looking for.
“As an engineer I’m pragmatic and used to dealing with challenges. The Chancellor promised to end ‘short-termism’ and I think most of industry would welcome a period of stability so we can try to control our own destiny.
“Rt Hon Rachel Reeves also spoke about investing for the future, and I am eager to see how this investment will materialise, and the tangible returns it will deliver for the economy. I am willing to support the government, but they must, in turn, support Britain, back small to medium-sized businesses, and fulfil their policy commitments.
“Ringfencing a significant proportion of the billion pounds announced for automotive, aerospace and life sciences so the domestic supply chain benefits should be the starting point and oven-baked into the new Industrial Strategy.
“The latter must be pushed through swiftly and it must seek the endorsement and buy-in of companies of all sizes, including SMEs. This should create the clear roadmap they need to follow to invest and innovate.
“As a passionate British manufacturer, it was great to hear industry mentioned so often and I sincerely hope this is genuine and not just lip service. This budget could give us a pathway to a brighter future, but there is challenging work to do.
“We need the Prime Minister and his team to drive, deliver and indeed put the UK back at the forefront of the G7 economies.”
“We manufacture high speed presses and tend to be a good bellwether for the UK economy, as if things are good companies are investing.
“The last 12 months have continued to be positive as firms, on the whole, have been exploring new opportunities and looking into new growth markets where we are especially strong.
“Automotive, aerospace and electrification were all mentioned in the budget and – with hopefully new money being pumped in by the Chancellor – this will generate us additional business.
“Now the BUT! The increase in NI for employers and the unexpected lowering of the threshold are two painful blows to management teams and will be exacerbated by the increase in the National Minimum Wage.
“The latter will have a far-reaching impact as it will squeeze salary boundaries and see more of your skilled and technical staff wanting wage rises to reflect the additional skills they bring to your business. While we’d all love to pay our staff the most we possibly can, where does this money come from when margins are tight and shrinking by the week?
“Bruderer UK has long championed the need for a real focus on getting the skills that industry actually needs, and I’m hoping we’ll read more on this in the weeks to come and with further clarity on what Skills England will bring to the table.”
“The tax rise on business is even worse than many of the commentators were predicting and, with 71 employees across our two technical academies in the West Midlands, the NI contributions increase and threshold reduction is a painful double whammy.
“We will need to factor in what this means, but it could certainly curtail some of our investment plans we were planning to make to inject even more new technology into the hands of our learners.
“From a training perspective, I sincerely hope that the creation of Skills England and the £240m put aside for trailblazer projects will help bring about some much-needed changes with the apprenticeship levy – mainly to help widen what training businesses can access.
“Apprentices have done very well out of the Chancellor’s pay increases with the biggest bump up to £7.55 per hour. This means their annual wage should rise to £14,762 from £12,513, a boost that will hopefully mean they choose vocational training and a long-term career over a quick job in McDonalds.
“Investment in the Industrial Strategy and for key growth sectors is a big one for In-Comm Training, as we do so much with engineering and advanced manufacturing.
“Again, we will need to see the detail, but I just hope that the money doesn’t just go to the big companies at the top of the chain and that it actually filters down to the SMEs.”
“The Budget undoubtedly curtails ambition. As a business committed to progress, we have quickly calculated that some of the tax rises announced today will add approximately £140,000 annually to our expenses, inevitably driving up our prices in an already competitive market with little scope for us to pass on.
“While we fully support fair wages and the need for appropriate compensation, the triple dose of National Minimum Wage, increase in employers’ National Insurance contribution and starting rate reduction, will be a difficult pill to swallow for a lot of manufacturers.
“The Chancellor talked consistently about growth, yet some of the decisions she has made today will negatively influence critical decisions around spending on new technology and hiring.
“On a more positive note, investment in electric vehicles, rail and general infrastructure should benefit a lot of our customers, who purchase specialist assemblies and harnesses from us.
“However rather than this being the major boost they want it to be for the supply chain, an uptick in business for us in these areas will simply sustain our current position as opposed to job creation and economic vitality.
“At Teepee Electrical, we have long focused on pushing forward and growing our business alongside a remarkable team, doing our best to mitigate factors outside of our control. This will remain central to our mission, but today’s Budget does pose significant challenges to our commitment.”
“As an exporter of 90% of our advanced materials and metals, I think it’s fair to say that there wasn’t a lot in the budget to boost international trade. We can only hope that there will be more detail and hopefully some positive news to follow.
“I would have liked to have seen more information on closer ties with Europe, something that had been mentioned in some of the briefings. This is our second biggest market and, since Brexit, I believe we are spending more than £250,000 as a company on additional labour and duty just to cut through some of the red tape and admin we face.
“This is not sustainable in the long-term and we would welcome any initiatives that smooth out that vitally important trading relationship.
“The Capital Gains Tax rate was an expected move but will hit investors and entrepreneurs. This is on top of changes made in 2020 by the previous government who reduced the lifetime allowance for Entrepreneur’s relief from £10m to £1m, adding an additional £900k in tax for some people.
“We have a strong acquisition policy, and this could potentially slow exits from owners waiting for a more favourable tax position, despite this being unlikely in the near term.”
“ADS welcomes this Budget’s ambition to deliver economic stability, which will provide businesses with the certainty they need to invest in the UK for the long term. Capping corporation tax at its current level while maintaining full expensing and R&D relief are a key part of achieving this ambition. ADS is also pleased to see the reconfirmation of £1bn in funding for the aerospace sector ahead of the Industrial Strategy.
“There is great value provided by this Government’s commitment to consistently work alongside business while developing policy, however, the current range of ongoing reviews cumulatively create a question of certainty for businesses. Developing clarity on future plans, such as the path to spending 2.5% of GDP on defence, is crucial for generating investment from industry.
“The UK’s aerospace, defence, security and space sectors, which generate £38.2bn in value for the UK economy, are vital to ensuring the long-term economic growth and stability this Budget seeks to generate, and we look forward to continuing to work with government and officials to secure UK advantage.”
“While the Chancellor used today’s Budget to repeat the commitment to invest in infrastructure through its 10-year strategy, the UK economy really needed to hear specific plans to support a more immediate boost to productivity and competitiveness through investment in robotics and automation in manufacturing, logistics and supply chain operations which are the very backbone of the UK economy.
“A pity, an opportunity missed – with only around 30% of such operations taking advantage of any automation at all, our industries and services remain largely reliant on warehousing, logistics and manufacturing systems that are outdated, no longer fit for purpose, and leave businesses vulnerable to disruption and overseas competition. With supply chains globally contributing some 60% of the world’s carbon emissions, accelerating the transition to more sustainable and efficient solutions stands to benefit society and the planet, as well as businesses and those that work in and rely on those firms.
“To be clear – the 10-year strategy must be accompanied with more specific plans to strengthen supply chains in the short term. Building resilience into how we respond to modern business challenges and investing in technology is the way forward. Confidence is key to driving capital investment in robotics, automation, AI and other advanced technologies that will not only unlock productivity opportunities that will help to fill the £22bn hole in the economy, but also bring increased resilience to the UK and go a long way to closing the gap to realising our national net zero ambitions.
“Also critical to delivering growth for the economy is addressing the talent crisis. The establishment of Skills England as part of this wider strategy is a promising first step – but we can support this transition by modernising the supply chain workplace with robotics, automation and other advanced technologies that people have come to expect in their everyday lives thus retaining, retraining and attracting a new and diverse generation of talent into the industry.
“This isn’t a problem that will be fixed overnight. But the Government needs to follow up on their long term plan with clear next steps to support confident investment to bring widespread adoption of robotics and automation to the UK’s supply chain backbone.”
“In a sector integral to the growth of the economy, it’s good to see the promise of the new UK government being fulfilled. The promise of the Labour manifesto was to invest in the sector through its strategic partnerships and Industrial Strategy Council, and despite the challenges of the reality they inherited, its given hope to UK manufacturing that they are able to stick with their promise. The recent dip in the manufacturing PMI to 51.5 illustrates a wary approach from businesses as they’ve waited for clarity, but the clarity has now been provided and it is exciting to see what comes next.
“Considering the challenges facing the economy, such as supply chain disruptions, inflation, and geopolitical tension, the commitment to investment is the turning point UK manufacturing has been waiting for.
“With over £2bn committed to funding a modern industrial strategy for the automotive sector, and £520m for a new Life Sciences Innovative Manufacturing fund, there is a lot of growth potential for these industries of the future.
“Investment into such sectors can enable manufacturing enterprises based in the UK to combat industry challenges, such as the global skills shortage, by utilizing tools that are often overlooked due to tightening budgets. For example, our own smart manufacturing research has revealed that enterprises are setting ambitious targets to accomplish Industry 5.0 goals before the end of 2025, including adoption and implementation of Artificial Intelligence (AI). AI has become the highest investment priority for 93% of companies, as it allows firms to improve operational efficiency, predictive maintenance, and resource allocation, and with support from the government, the industry as a whole is expected to meet these ambitious goals even quicker.
“The increased investment completes the expectation from the Labour government that they will create a pro-business environment that supports innovation, investment and high-quality jobs. We’re excited to see the evolution for our customers with such support behind them. This is really just the starting point for the next wave of innovation from the manufacturing sector – and with significant funding committed – is expected to put UK manufacturing at the forefront of the next phase of the industrial revolution.”
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