
Industry Insights
2025 industry outlook: UK manufacturing
3rd February 2025
As the UK’s manufacturers’ organisation, Make UK brings together a collaborative network of members in regional and national communities, and is a champion of growth and innovation. Drawing on the organisation’s deep understanding of the challenges faced by businesses. Kate Fairhurst, Interim Head of Policy at Make UK, shares the organisation’s insights into the current sector landscape… and looks at what 2025 has in store for manufacturers.
What key announcements is Make UK looking out for in 2025?
In terms of policy, the Government’s publication of their Industrial Strategy will be important. Manufacturers are looking forward to the strategy providing a clear direction and focus for the sector, as well as clarity on investment and funding, and a focus on innovation and strengths. The Government’s Green Paper was a good start, but Make UK wants to see more flesh on the bones in the final version, particularly around skills. For example, whilst the Green Paper acknowledges that the UK suffers from a lack of technical skills, it only gives a partial diagnosis of the problem in the defined growth sectors, including manufacturing. It is imperative that the Government underpins the Industrial Strategy with clear policy direction on skills which is vital to the UK’s future growth.
The Government’s Spending Review in the spring will also be a vital announcement, laying out the Government’s spending plans for the next three years. Make UK is already proactively engaging with Government on this.
What technology will be making an impact on manufacturers this year?
Automation and new digital technologies are key ways that UK manufacturers will shape our economy in the coming year, as well as control and mitigate increasing cost burdens. We hope that the Government will align its Industrial Strategy with the digital future of manufacturing and tackle common barriers to growth, for example access to skills and finance. If they succeed, this year could pave the way for more technological advancements, including in areas such as AI, that will underpin economic growth.
According to our recent Executive Survey, delivered in association with PwC, 29% of manufacturers are looking to technology, the cloud and AI to succeed in 2025.
How do you see the manufacturing sector evolving in 2025 – what will be the key trends?
According to the Executive Survey, compared to 2024, there is a good deal of consistency in manufacturers’ outlooks in 2025. Most manufacturers feel like they will be balancing significant risks (in regard to increasing costs) and significant opportunities too. Despite escalating costs, a majority of manufacturers believe that, overall, the UK remains a competitive place in which to manufacture. The survey also showed that manufacturers want to use this year to invest in new sales streams, with 63% looking to explore new products this year.
What will be the main challenges for the manufacturing industry this year?
According to the Executive Survey, the main challenges for the industry in the coming year will be increasing costs placed on businesses. 92% of those surveyed cited employment costs as the key risk for 2025, primarily owing to the ramifications of the Autumn Budget last year. Unsurprisingly, SMEs feel particularly at risk. Energy costs are also a big challenge, with 70% expecting a significant or moderate increase in bills.
What can we expect from Make UK in 2025?
To name just one example on the policy front, we have been excited to launch our Industrial Strategy Skills Commission to contribute our own thinking to the skills debate, seeking to address how the new Skills and Growth Levy can help to reverse the decline in apprenticeship starts and provide employers with the skills they need to grow. The Commission is jointly chaired by former Skills Minister Robert Halfon and former Deputy Leader Lord Tom Watson. The Commission will report in Q1 2025 ahead of the spring multi-year Spending Review.
We will be holding our Manufacturing Expo in June which will be a great opportunity for members to connect and grow.
Before that, we will be having our annual National Manufacturing Conference in London on March 4, which is our flagship event to celebrate the achievements of the industry, bring together political and sector stakeholders, and share best practice. You can find out more information here: https://www.makeuk.org/news-and-events/events/national-manufacturing-conference.
Through its campaigning, sector expertise, leading business services, apprenticeship training and extensive network, Make UK has been supporting companies from around the UK of all sizes for more than 130 years.
For more information, visit www.makeuk.org