UK manufacturing faces threats from tax and energy costs

A joint report by Make UK and Bishop Fleming warns that the future of UK manufacturing is under threat due to tax policies, high energy costs, and succession challenges. Family-owned manufacturers, which represent 65% of the sector and contribute approximately £94bn to the economy while supporting one million jobs, are facing significant hurdles to growth and continuity.

Key findings indicate that 78% of family-owned manufacturers are concerned about the impact of inheritance tax (IHT) reforms and changes to Business Property Relief on succession planning. Consequently, 22% of these firms are considering selling to overseas buyers, while another 18% are considering sales to UK-based buyers. This trend raises concerns regarding the potential loss of domestic industrial capability and know-how.

Beyond taxation, energy costs remain a primary obstacle. Approximately 59% of manufacturers identified energy prices as a barrier to growth, noting that UK industrial electricity prices are currently the highest in the G7. The report suggests that unless the government addresses these tax pressures and high costs, its ambitions for national reindustrialization may be undermined.