Manufacturers are cutting jobs at the most rapid rate in over four years, as revealed by recent data, while grappling with skyrocketing energy costs and the financial impact of Chancellor Rachel Reeves' tax increases.
The latest quarterly survey from the Confederation of British Industry (CBI) indicates a slight easing in the decline of manufacturing output up to April, hinting at potential resilience within certain areas of the sector, as reported by .
However, the CBI has highlighted that numerous businesses are feeling the "cumulative burden" of tax increments and an elevated national living wage, leading to a significant drop in workforce numbers.
Concerns about challenging "conditions abroad" have also risen among manufacturers.
The comprehensive trade war initiated by President Trump, which imposes tariffs on steel and vehicles produced in Britain, is causing widespread anxiety in the sector. An increasing number of companies anticipate a downturn in orders over the next three months leading to July.
The introduction of Reeves' £20bn rise in employers' national insurance contributions (NICs) earlier this month has compelled manufacturers to reassess their financial strategies and future planning.
There's a noticeable trend of companies intending to curb investment in new machinery and innovation. Investment plans for training and retraining are at their lowest point in five years.
Manufacturers 'feeling the rising costs burden'
Ben Jones, the CBI's principal economist, remarked that manufacturers appear "gloomy about their prospects" in light of a rather grim forecast.
"The combination of financial pressures, market instability and falling confidence is leading manufacturers to cut back employment and investment," he stated.
"The wider geopolitical environment is becoming increasingly challenging for exporters, with export optimism falling sharply for a second successive quarter and export order volumes now hovering around post-pandemic lows."
"Firms are already feeling the cumulative burden of rises in NICs and the National Living Wage – and tariffs represent another headwind for the business sector. The government needs to view every decision through the lens of kickstarting growth and incentivising investment."
The CBI's data adds to a series of disheartening updates for the º£½ÇÊÓƵ's manufacturing sector.
Make º£½ÇÊÓƵ reported a decline in manufacturing output in the first quarter of the year, marking the first drop during this period in ten years.
Last month, the industry body predicted that manufacturing would shrink by 0.5 per cent this year, with its findings being labelled as "ominous."
Separately, S&P Global disclosed on Wednesday that manufacturing output in April continued to fall as exporters experienced a decrease in sales amidst an intensifying global trade war.
President Trump has moderated his stance on the tariff war while manufacturers anxiously await the outcome of whether a trade deal will be struck before baseline ten per cent tariffs on all goods are implemented.
However, the º£½ÇÊÓƵ is at risk of suffering from the fallout of aggressive tariffs between the US and China. Car manufacturers have already felt a significant impact as 25 per cent tariffs on imports to the US have persisted, affecting approximately £9bn worth of trade between Britain and America.
Earlier today, the Office for National Statistics disclosed in a biweekly survey of businesses that the primary concern for employers was the high cost of labour.
