Following the release of the latest UK manufacturing PMI today (1 September), Chris Barlow, partner at MHA, believes that another Bank of England (BoE) interest rate rise would further damage confidence within the manufacturing sector:
“A September rate increase could harm manufacturers already grappling with successive interest rate rises, high energy costs, recent corporation tax increases and reductions in the rates available for claiming R&D tax credits, despite recent more positive sector trends. Manufacturing, which makes up 9.4% of GDP, requires sustained government support to avert setbacks. Assistance is essential to maintain momentum and economic alignment.
“To address the perilous state of manufacturing we really need the forward-looking industrial strategy so many have asked for, for so long. The upcoming autumn statement should include measures like lowering the 25% corporation tax rate and reversing R&D cuts, especially for SMEs.
“Furthermore, to meet the UK’s environmental ambitions, properly incentivising sustainable practices is crucial. Industry leaders burdened by costs must be aided in integrating green solutions without financial strain. A comprehensive set of green incentives could play a pivotal role in facilitating the transition towards a net-zero future."