Business confidence among East Midlands manufacturers has dipped sharply to the lowest level in a year in response to rocketing costs, according to a survey published by Make UK and business advisory firm BDO.
The Make UK/BDO Manufacturing Outlook Q4 survey shows that while output remained positive in the last three months at a balance of +12%, orders fell and are forecast to fall further in the next 3 months to -12%. While recruitment intentions in the region remained stable, the fall in confidence resulted in cutbacks in investment which also turned negative at -12%.
This picture contrasts sharply with the previous survey when almost six in ten companies (58%) saw a brighter economic outlook under a new Government and, bar the immediate post-Covid recovery, when business confidence among manufacturers had reached its highest level in a decade.
According to the survey, 70% of East Midlands manufacturers have seen their costs already increase by up to a fifth in the last year, while almost one in ten (8%) had seen their costs rise by up to a half. In particular, the survey shows almost nine in ten companies (86%) will see their business costs increase due to the Make Work Pay reforms, with almost half of companies (44%) saying the increase will be ‘significant’.
With the Budget set to add substantial extra business costs to those that companies were already facing, in particular the changes to National Insurance Contributions, Make UK has cut its growth forecasts with manufacturing contracting by -0.2% this year and growing by just 0.7% in 2025.
In response, Make UK is urging the Government to look at measures which might help alleviate the impact of rising costs, in particular reforms to business rates and current incentives to decarbonise.
Chris Corkan, Region Director at Make UK in the Midlands, said: “Having faced a cost creep for most of the year, manufacturers in the East Midlands are now facing a cost crisis which has brought a sharp dip in their confidence.
“While overall conditions had begun to gradually improve during the year, the Budget has brought this to a shuddering halt, with the substantial increase in National Insurance Contributions potentially the straw that might break the camel’s back for some.
“There is now an urgent need for Government to look at other measures which might mitigate the impact of the rocketing costs that businesses are now facing.”
Jonathan Lanes, Head of Manufacturing at BDO in the Midlands, said: “While manufacturers across the East Midlands have welcomed the Government’s Industrial Strategy green paper, optimism across the region is declining, driven by increased input costs and the implications of the latest Budget on employment costs.
“Increasing investment in improving productivity is vital now more than ever to maintain stability and offer opportunities for growth across the East Midlands and the wider sector.”
