A stark new report from industry body Make UK has issued a severe warning about the future of manufacturing in the United Kingdom, stating that the sector's competitiveness is now under critical threat.
Optimism Clouded by Escalating Costs
While a survey of 174 senior manufacturing executives, published on 12 January 2026, revealed a degree of cautious optimism that business opportunities in the year ahead would outweigh risks, this sentiment is heavily overshadowed by mounting pressures. The research highlights that escalating business costs are perilously close to reaching a "tipping point".
The consequences of reaching this threshold could be dire, with the report cautioning that vital investment plans are at serious risk of being either scrapped entirely or relocated to other countries. This poses a fundamental challenge to the UK's status as a prime destination for manufacturing and industrial investment.
A Call for Urgent Government Delivery
Make UK's chief executive, Stephen Phipson, praised the sector's enduring resilience, noting that innovative firms committed to investing in technology, markets, and their workforce continue to thrive. However, he stressed this can only happen within a supportive business environment.
"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," Phipson stated. He added a direct challenge to policymakers: "The Government promised significant change – now is the time to deliver it."
The survey findings underscore this call, with over half of the businesses polled believing that a comprehensive industrial strategy with sector-specific plans would be the most influential factor for growth in 2026. In a promising sign of intent, nearly two-thirds indicated they are prepared to accelerate their own investment if the right conditions are met.
Government Response and Energy Challenge
In response to the report, a Government spokesperson pointed to existing support, stating: "We are pleased businesses are positive about our modern industrial strategy, which will give them the backing they need to continue to grow in 2026."
The spokesperson specifically addressed the critical issue of energy costs, acknowledging it as one of the greatest challenges. They highlighted the British Industrial Competitiveness Scheme, through which thousands of manufacturing firms are expected to see their electricity bills reduced by 25%.
Nevertheless, the core warning from Make UK remains clear: without urgent and effective action to improve the business environment and control costs, the UK's manufacturing base could face irreversible damage, with investment and jobs moving overseas.
