Britain’s manufacturers have called for “urgent” government support after new figures show a slowdown in growth, orders and exports.
Make UK, which champions the manufacturing sector, has today published a set of recommendations for measures that it wants the Government to introduce to address rising business costs and challenges.
They include a reduction or complete waiver of business rates for the next 12 months and deferrals of VAT for larger businesses with complete waivers for small and medium-sized manufacturers.
Make UK today published its second-quarter Manufacturing Outlook survey, carried out with business advisory group BDO, which shows growth and orders slowing significantly, exports almost at a standstill and investment nosediving as companies cut or postpone plans to maintain cashflow.
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 eye-watering costs and a difficult international environment. This threatens to shatter expectations of a sustained recovery from the pandemic.”
Richard Austin, head of manufacturing at BDO, added: “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.”
Make UK stressed that the seriousness of the situation and the prospects for the next six months meant that British industry could not wait for the promised help in the autumn which Chancellor Rishi Sunak presented in his Spring Statement.
It said that action was required “urgently before the summer recess” on 21 July.
Make UK’s other recommendations include a temporary freeze on the Climate Change Levy and, if energy costs continue to rise, a complete removal of the levy.
It also called for a review of the effectiveness of the business interruption loan schemes introduced during the pandemic and to introduce a successor scheme by the third quarter of this year.
It recommended an extension to the super-deduction investment policy, which enables companies to claim a 130% capital allowance on qualifying plant and machinery investments. The support currently runs until 31 March 2023.
It also urged the Government to make the increase in the Annual Investment Allowance permanent. This tax relief on assets bought for a business has been temporarily increased to £1 million until 31 March 2023.
In addition to immediate measures, Make UK also stressed that the Government must “move away from short-term, gesture politics”.
Instead, the organisation said, the Government 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”.