Pre-Budget Comment for the Manufacturing & Engineering Sector

For the manufacturing and engineering sector challenging times lie ahead, but there are measures that could help.


The Manufacturing sector is facing increasing headwinds due to a combination of Brexit, the end of the furlough scheme, gas and CO2 supply costs and restrictions, logistics costs on shipping and road freight. Recruitment is also challenging with current vacancies in the UK being at record levels. In addition, the Government has increased taxes for companies – the corporate tax rate has gone up from 19% to 25% with effect from April 2023 and the new Health and Social Care Levy, which applies from April 2023 but comes into force as increased National Insurance Contributions from April 2022, will also put extra strain on businesses.

In short, the sector is facing a whole range of challenges over the next 12 months so it will be very interesting to see what the Chancellor announces in the Autumn Budget and if it will help to ease the burden. What would be of benefit is a pause from increasing costs on businesses to let the current changes settle in so that businesses can get a true idea of what the changes are doing to their ability to compete both in domestic and international markets. The Government should also be aiming to tackle shortages in labour supply in certain sectors and go beyond temporary measures.

For example, they could implement permanent measures and go beyond “sticking plasters” such as the accelerated qualifications for HGV drivers. An increase in targeted tax reliefs could offset some of the tax burden being placed on manufacturers For Example, the R&D tax credit should increase in line with the increase in Corporation Tax rates. And finally, the Government should seek to resolve the trading issues which exist between Great Britain and Northern Ireland, as well as issues relating to the delayed checks on importing goods from the EU.

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