S&P Global business surveys show that British manufacturers have suffered an extreme downturn in December.
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UK manufacturing is losing its attraction to investors (Constant Manufacturing)
Foreign investors are beginning to lose interest in UK manufacturers due to skyrocketing energy prices and political turmoil, according to manufacturers in an industry survey published on Monday.
The percentage of manufacturers who believe the UK is still a competitive region plunged to 31% from 63% a year ago, and 43% believed that Britain is now less attractive to foreign investors, per a survey conducted by Make UK, the main trade body for British manufacturers, and accountants PwC (Price Waterhouse Cooper), in November.
Back in November when former PM Liz Truss took over, political turmoil and financial troubles were widespread in the UK, and 53% of companies stated that political instability destroyed business confidence.
Read more: UK recession gravely affecting cost-of-living, extends throughout 2023
However, this week, Finance Minister Jeremy Hunt is supposed to outline a plan to scale back energy subsidies for businesses. According to Make UK, these plans will potentially exacerbate job cuts and productions that are already at risk.
If done, the cost of support will drop by 85% during the next financial year, which would limit the cost to 5 billion pounds ($6 billion), according to the Daily Telegraph.
Constant uncertainty
S&P Global business surveys show that British manufacturers suffered an extreme downturn in December compared to other fellow Group of Seven (G7) nations.
Stephen Phipson, chief executive of Make UK, expressed that “The year ahead is going to be very challenging for manufacturers with a potent mix of factors testing their resolve,” adding: “Ongoing supply chain disruption, access to labor and high transport costs which show no sign of abating can be added to a growing sense of economic and political uncertainty in their main markets.”
A significant risk exists according to Phipson, whereby manufacturers will “fall through the cracks” if the government fails to provide generous energy bill support that other competitors and nations have in place.
Back in November, UK Treasury officials stated that UK Prime Minister Rishi Sunak plans to hike taxes to overcome a 50 billion pound ($57.5 billion) deficit in public finances. The government’s medium-term financial strategy “to put public expenditure on a sustainable foundation, get debt reducing, and restore stability” is anticipated.
Workers across the economy are at odds with the government, demanding large wage raises to cope with decades-high inflation, which is presently running at about 11%. Due to the long-term inflationary consequences of the pandemic and turmoil in Ukraine, the UK will, according to a Financial Times report, experience one of the longest recessions and the worst recoveries among G7 economies throughout 2023.
