The manufacturing sector in the UK faces a pivotal moment as it grapples with challenges like lagging productivity and sluggish investment compared to global peers. Yet, amidst these headwinds, RSM UK’s Mike Thornton highlights a glimmer of optimism for 2025, driven by targeted government spending and a shift towards digitalisation and decarbonisation.
UK manufacturing has long wrestled with productivity issues, a cornerstone of economic growth and higher living standards. The sector’s recent performance, reflected in a slight dip in the headline PMI, underlines these struggles. Thornton points to concerns stemming from the Autumn Budget, including rising employment costs and increased National Insurance contributions, which weigh heavily on manufacturers. Adding to the complexity are global pressures like potential tariff changes in the US, which could further strain operations.
However, Thornton notes that these challenges also present opportunities. The need to mitigate costs and shield customers from steep price increases could act as a catalyst for much-needed investment. According to RSM UK’s recent Investment Monitor survey with Make UK, demand remains the primary driver for manufacturers’ investment decisions. With government spending set to boost economic growth to nearly 2% in 2025, manufacturers are poised to channel resources into productivity-enhancing initiatives.
Thornton emphasises that advanced manufacturing, while underserved in the government’s Industrial Strategy green paper, stands to benefit from investment in digital technologies and clean energy solutions. These global megatrends—digitalisation and decarbonisation—are expected to guide capital allocation as manufacturers strive to future-proof their operations. While government spending may provide a short-term boost, the strategic investments made in 2025 are likely to leave UK manufacturing more resilient and better equipped for sustainable growth heading into 2026.
RSM UK predicts that the focus on innovation and improved productivity will not only strengthen the sector’s foundation but also align with broader economic and environmental priorities. With increased demand, a need for cost efficiency, and a shift towards cutting-edge solutions, the outlook for UK manufacturing in 2025 appears brighter than it has in years.
RSM UK provides audit, tax, and consulting services, supporting businesses with strategic insights and practical solutions tailored to drive growth.
Likewise Group PLC (LON:LIKE) is a distributor of floorcoverings and matting and has the opportunity to consolidate the domestic and commercial floorcovering markets to become one of the UK’s largest distributors in this sector.
