The Labour Party’s industrial strategy has won significant backing from Make UK, the country’s leading trade body representing the manufacturing sector. Make UK is optimistic that a well-implemented plan could drive substantial investment and encourage reshoring of manufacturing to the UK. This belief is underscored by findings from a recent survey by Make UK, revealing that 70% of its members anticipate accelerating their reshoring activities in response to Labour’s strategy.
Labour’s proposal, titled Invest 2035: The UK’s Modern Industrial Strategy, lays out a long-term vision to foster business stability. By creating an environment for businesses to plan well beyond the usual yearly horizon, it aims to promote consistent industrial growth over the next decade. A central element of this strategy is the formation of a standing industrial strategy council, designed to provide policy consistency and reduce disruptions from short-term political shifts. The strategy also prioritises supporting eight key sectors where the UK has strong potential: advanced manufacturing, clean energy, creative industries, defence, digital technologies, financial services, life sciences, and professional and business services.
Make UK believes this strategy could be transformative. The manufacturing sector, which currently contributes £217 billion to the UK economy, could grow significantly, reaching up to 15% of GDP and potentially adding another £142 billion. Investment in the industry stands at £38.2 billion per year, but Make UK anticipates that reshoring and expanding UK-based investments could lead to much higher figures. Fhaheen Khan, Make UK’s senior economist, expressed excitement about the strategy’s prospects, noting that manufacturers are ready to capitalise on these new opportunities, especially in automation and advanced digital technologies. Khan also highlighted the critical need for the UK to act quickly, especially as the US, Europe, and China ramp up investment in green technologies. According to him, taking swift action would help the UK remain competitive on the international stage.
The Make UK survey reflected the priorities of industrial leaders, with investment in UK facilities, automation, and research and development emerging as top objectives. Many manufacturers are also focused on increasing exports, particularly with the European Union, as the UK seeks to strengthen trade ties in the post-Brexit period. Fiscal incentives rank high on the agenda for many surveyed, with more than half of respondents suggesting that a reduction in corporation tax would have a significant positive impact on investment. Expanding capital allowances to include software, as well as extending tax benefits to leased and second-hand machinery, were also highlighted as steps to stimulate industrial growth.
However, some obstacles remain. High interest rates have been a notable barrier to investment, with many companies hoping for future cuts by the Bank of England to ease this pressure. Additionally, manufacturers see it as essential for the UK to align its strategies with international efforts, particularly in green technology. The US, Europe, and China are all making swift advances in green investments, and for the UK to secure its competitive edge, it must not fall behind in these initiatives.
Labour’s industrial strategy has received broad support within the manufacturing sector, with Make UK leaders pointing to the immense potential for growth if the proposed measures are implemented effectively. Although challenges such as high interest rates remain, there is optimism that with the right policies, the UK can strengthen its manufacturing sector and position itself competitively on a global scale.
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