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Manufacturers have warned that the UK government must deliver on its promise of an effective business plan to end rising employment costs set by Chancellor Rachel Reeves in last October's Budget.
A post-budget survey of senior manufacturing executives found that 57 percent believed the long-term business plan would lead to increased investment, despite almost universal concern about higher wages and energy costs.
“The pressure on the business plan we have now will be even greater to put confidence in investors on the way to growth,” warned Make UK, the commercial manufacturers.
The high expectations for the business plan come as Whitehall prepares what government officials will do they have warned will be a review of brutal spending, as the UK's public finances have come under increasing pressure from the bond markets in the past week.
A senior Whitehall official said that there is now a growing risk of a mismatch between the expectations of the business plan and what was delivered, due to the lack of government funding available to finance seeds outside of key missions, such as getting to zero or increasing defence.
“Unless it's for tanks or windmills, there's no money,” said a Whitehall official.
A survey of 161 product managers agreed with leading industry groups, including the CBI and British Chambers of Commercehighlighting the impact of Rachel Reeves' decision to increase employers' national insurance contributions.
More than 90 per cent of respondents said employment costs would be their biggest expense in the coming year, due to NIC increases, increased employment rights and a rise in the national living wage.
As a result, the survey found that businesses will look to both cut costs and raise prices, adding inflationary pressure to the economy. “This will be painful for both customers and their employees,” added the UK.
However, despite the gloomy outlook, the survey identified “high hopes” that the planned publication of the business plan in the spring could prove “a game changer for investment”.
Labor government announced it industrial strategy last October, published a plan to target eight sectors, including advanced manufacturing, clean energy and life sciences, in an effort increase investment and drive economic growth.
A senior executive from carmaker Nissan said the publication of the business plan was “crucial for the future” of UK car design and manufacturing.
“Global competition for investment is at an all-time high and it is clear that UK manufacturing is at a turning point. “Countries that can demonstrate a clear long-term strategy, supported by policies that promote an attractive investment environment, will be first in line,” added the Nissan executive.
The plan will be managed by a 16-member Business Strategy Advisory Council chaired by Clare Barclay, chief executive of Microsoft UK. Other members include Rolls-Royce chairman Dame Anita Frew and Greg Clarkformer Conservative business secretary.
Whitehall insiders say consultations on the nature of the business plan, which closed in November, are ongoing attracted a great response from the industrywith over 3,000 responses submitted to the Department of Business and Trade.
Make UK chief executive Stephen Phipson said more details were needed in areas such as skills and regional delivery policy.
“The government has taken an important first step, but now it must return this by setting urgent and important priorities which will include giving clear benefits that they believe will bring them,” he added.
Business Minister Sarah Jones said she welcomed the confidence shown in the strategy. “We will continue to do everything we can to promote high-quality UK businesses to global investors,” he added.
Data visualization by Amy Borrett