The UK’s manufacturing sector is in sustained decline, with engineering, long a cornerstone of national competitiveness, also under pressure.
Recent data and OBR forecasts highlight both immediate challenges and structural risks.
Current state: key alarms
- The S&P Global UK Manufacturing PMI fell to 46.2 in Sept 2025, its steepest contraction in five months.
- Output hit a six-month low, driven by collapsing new orders, weak exports, and supply chain shocks.
- Employment has now declined for 11 straight months, the sharpest losses among major economies.
The Office for Budget Responsibility (OBR) projects UK GDP growth of just 0.8% in 2025 (after 0.6% in 2024), with business investment set to fall 1.2%. Weak industrial confidence is a major factor.
Why manufacturing still matters
- Sales: £452.2bn in 2024, down 3.1% from 2023.
- Employment: 2.6m people, with wages 8% above the national average.
- Exports: 42% of total UK exports.
- R&D: 48% of business R&D spending.
The Office for Budget Responsibility (OBR) projects UK GDP growth of 1.0% in 2025 (after 0.6% in 2024), with business investment expected to edge down by 0.2%. Weak industrial confidence is a contributing factor.
Pressures on the ground
- Energy costs squeeze heavy industry.
- Trade barriers and falling export orders.
- Policy uncertainty: high taxes and shifting rules.
- Skills gaps: many firms pausing recruitment.
- Regional divides: OBR notes productivity in manufacturing-heavy Midlands and North remains far behind London and the South East.
What could turn the tide
- Tech adoption: automation, AI, predictive maintenance.
- Resilient supply chains: diversifying suppliers.
- Reskilling: digital, engineering and data skills.
- Capital access: financing to modernise and decarbonise.
- Stable policy: clear tax, energy and infrastructure commitments.
Conclusion
UK manufacturing and engineering face undeniable strain, feeding into sluggish national growth. The OBR’s forecasts of weak GDP, minimal export growth, and stubborn productivity gaps reinforce the urgency.
Firms that invest and adapt can still emerge stronger, but without decisive policy support, the UK risks locking in an industrial decline that will be far harder to reverse.
You’re not alone – we’re here to help
The challenges currently facing UK manufacturing and engineering are significant, but you are not facing them in isolation.
Many businesses across the sector are experiencing the same pressures, and it is during these times that the right support can make the greatest difference.
At BFS, we understand the strain that uncertain markets, rising costs, and shifting policies can place on even the strongest businesses.
That is why we are committed to standing alongside you, offering practical support where it is most needed.
Whether it is working with an experienced accountant to develop a strategic business plan or providing short medium & long term financial solutions to support cashflow during a critical period, our focus is on helping you navigate the challenges and create a clear path forward.
If your business is feeling the weight of these pressures, we would welcome the opportunity to meet with you and explore how we can provide the guidance and stability you need to move confidently into the future.
