81pc of manufacturers say Government support inadequate

Despite this, sustainability remains in focus as 66 per cent have continued to invest in becoming carbon neutral.

Now in its fourth year, Crowe’s annual Manufacturing Outlook Report, produced in association with the West Bromwich-based Confederation of British Metalforming, collates results from a survey of respondents across the UK manufacturing community.

The findings demonstrate that the sector has been drastically impacted by ongoing economic turmoil and lack of government intervention, but that growth prospects remain relatively strong, with 60 per cent expecting turnover to grow despite such challenges.

This is a drop-off in overall sentiment and confidence from a year ago, when three quarters (74 per cent) of respondents cited positive growth expectations. There has been a significant increase in concern around global economic factors (38 per cent see it as the main barrier to growth, ahead of recruitment challenges which topped the list last year), which reflects the impact of global supply chain pressures and the conflict in Ukraine. Meanwhile, just 10 per cednt of respondents (down from 17 per cent last year) see working capital/cash as a main barrier to growth in the next 12 months.

This is indicative of a sector focussing on survival rather than growth, especially given the ongoing economic hardship and rising energy costs, which were previously not featured as a concern at all, but now ranks third.

The spectre of Brexit remains, but is less of a concern than in recent years, ranked by only six per cent as a key barrier to growth, down from 10 per cent last year and 25 per cent in 2020, showing that businesses are increasingly getting to grips with the challenges, as well as having to focus their attention elsewhere.

Of greater concern is the worrying trend of declining research and developement claims. In 2021, 65 per cent of respondents made an R&D related claim (59 per cent in 2020 and 67 per cent in 2019). The stark drop-off to just 38 per cent for 2022 is a concern in that innovation may suffer.

Johnathan Dudley, head of manufacturing at Crowe and based at Oldbury, said: “It is a case of survival not thrival at the moment, despite the best efforts of manufacturers.

“While business is positive about growth prospects, the UK will not achieve the Chancellor’s ambition of becoming ‘the next Silicon Valley’ without drastic change to help stimulate the sector. More strategic thinking, in place of short-term tactics, is required to support innovation. Without such incentives, the Chancellor will be left with an (un)-Happy Valley, rather than the Silicon Valley he desires.

“The ‘gamble’ of investment during a downturn must be weighed against the risk of businesses failing because of a lack of such strategic investment. The successful businesses will be those that manage their risks, anticipate trends and act on the opportunities presented by them. Government should act to facilitate this success and restore manufacturing as the nation’s lifeblood.”