Britain's manufacturing sector is approaching a critical 'tipping point' on competitiveness, industry leaders have warned, issuing a stark message to the Labour government for the year ahead.
Cost Pressures Threaten Investment
A new survey from the industry body Make UK reveals that senior executives across the sector fear relentless cost pressures could soon force a decisive shift. While there is some optimism about potential opportunities in 2026, bosses are sounding the alarm that investment plans are increasingly at risk of being cancelled or moved abroad.
Stephen Phipson, chief executive of Make UK, stated that while innovative and investing firms can thrive, they need the right environment. "Manufacturers can only thrive if they are operating in the most favourable business environment," he said. "Despite the commitment to an industrial strategy, not only is growth anaemic but the warning lights are now flashing red on the UK as a competitive place to manufacture and invest."
Cyber Attack Fallout and Fragile Recovery
The industry faced a crippling blow in 2025 following a major cyber attack at Jaguar Land Rover (JLR). The incident halted production for five weeks from September 1, triggering an estimated £1.9bn hit.
The subsequent restart of JLR's production lines provided a significant boost to national supply chains. This helped contribute to a sector recovery reflected in the latest UK Manufacturing Purchasing Managers’ Index (PMI) from S&P Global, which hit a 15-month high in December 2025, marking a second consecutive month of growth.
However, industry figures caution that this growth, partly driven by a temporary surge in new orders, will be tested in the coming months as the sector seeks more durable momentum.
A Call for Government Action
The survey of 174 companies underscores a clear demand for policy intervention. Over two thirds of respondents said they would bring forward investment plans if the government implemented an industrial strategy that effectively drives growth.
Phipson emphasised the urgency, directly addressing the government's promises: "The Government promised significant change – now is the time to deliver it." The message from the sector's leadership is unequivocal: without a more supportive and competitive business environment, the UK risks seeing vital manufacturing investment and capacity migrate overseas.
