Investment sharply rises in UK manufacturing after tax break

Companies plan to increase or bring forward their plans in response, according to a survey new Make UK survey.

This comes on the back of a boost to confidence from the latest budget, especially among mid-size and larger companies, with the planned rise in corporation tax doing little on the surface to impact significantly on investment domestically or from overseas.

However, Make UK stressed that given the UK's longstanding poor performance on investment there remains a need for a longer-term, broad ranging industrial strategy that will genuinely put manufacturing at the heart of plans to recover from the pandemic. According to Make UK this should encompass a partnership between Government, Industry and the UK's world class science base to boost the UK’s innovation and investment performance.

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Verity Davidge, director of policy at Make UK, said: “The budget has made a clear impact on manufacturers in terms of confidence and they are set to step up their plans to invest in response. For too long the UK’s investment performance has been below par and the incentive should provide a boost in the short-term at least.

“However, one swallow doesn’t make a summer and, with the economy at a crossroad, there remains an urgent need to consider how we make a structural change to investment for the long term. This must be done in the round of an industrial strategy that looks beyond the horizon, plays to the UK’s undoubted strengths in science and innovation and seeks to truly ‘build back better’

According to the survey, 23% of companies said they plan to increase investment as a direct response to the super-deduction tax with 28% saying they will bring forward investment plans in response. The incentive was also seen by 32.4% as the budget measure which had the biggest impact followed by the decision to extend the furlough scheme (23%) and boost to R&D (21%).

The survey also shows that the planned increase in Corporation Tax has largely been accepted by manufacturers with 55%) saying in would have no impact on overseas or company investment plans. 28% thought it would deter foreign investment in the UK while 16% said it would have a negative impact on their company investment plans.

Conditions for the sector are continuing to improve for the sector overall with 47% saying sales and orders had improved since the start of the year with 16% of companies saying they were worse.

However, despite the improving business picture generally manufacturers are still looking to a very long term recovery with 28% still saying a return to normal trading is more than a year away, with 26% saying normal trading will take between six and 12 months to return.

The survey of 149 companies was conducted from 17-24 March.

Make UK www.makeuk.org