Following the release of the latest UK manufacturing PMI today (3 July), Chris Barlow, partner at MHA, believes that the Bank of England’s (BofE) decision to raise interest rates and a lack of industrial strategy is stifling a sector in desperate need of a confidence boost:
“The Bank of England’s recent interest rate increase is bad news for UK manufacturing. Whilst lenders have shown a willingness to help viable businesses, there’s growing sector feeling that BofE policy is going to push Britain toward recession. The threat of recession has crippled manufacturers’ investment plans, with many discussing or actively reducing future investment. If the BofE raises interest rates further they seriously risk pushing the country down the dark road of recession.
“The rise has fallen during a particularly challenging time for manufacturers, with the recent drop in R&D tax relief and overwhelming pressure to increase wages starting to bite. With inflation keeping the vast majority of sector costs at record levels it seems counterintuitive for the government to continue driving down a path that has shown no signs of working so far.
“Given the plethora of reasons dampening sector confidence, the introduction of a long term manufacturing strategy has never been more urgent. The government must grasp the opportunity to provide manufacturers with a non-political, long term strategy that will super-charge the sector in the years to come and incentivise greater investment in operations, automation and green technology.”
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