Rising employment taxes, business costs, and global trade uncertainty are forcing UK manufacturers to halt recruitment, consider job cuts, and scale back investment, according to a new report by Make UK and BDO.

The report surveyed over 300 manufacturers and found that financial pressures are stalling growth, with some firms cancelling investment plans entirely. Make UK calls on the Government to reform business rates, overhaul the skills system, and introduce a long-term industrial strategy focused on advanced manufacturing.

The industry group warns that manufacturers will struggle to compete and expand in the current economic climate without immediate policy support.

Yorkshire & Humber manufacturers have seen a strong start to the year according to a survey published by Make UK and business advisory firm BDO. The Make UK/BDO Manufacturing Outlook Q1 survey shows that both output (+26%) and orders (+32%) were very positive, although the picture is set to ease in the next quarter with forward looking balances of +11% and +6% respectively. The strong performance this quarter reflects demand for metals products for the construction sector. In addition, Make UK has begun to see a pattern of regional variations of increased activity across some areas of the UK which it believes may reflect company behaviour in certain regions in response to the economic shocks of the last few years. It believes that these variations in regional and sector performance may become normal moving forward. In response to this positive picture companies are looking to take on more people with recruitment intentions at +37%, which is substantially ahead of the national average. Capital expenditure plans are also ahead of the national average at +26%. To build on this largely buoyant sentiment, Make UK is calling on the Government to bring forward a comprehensive, fully funded and modern, long term industrial strategy which has advanced manufacturing at its heart, something it has committed to do before the summer. This must be aligned across Government to include a defence industrial strategy as well as energy, trade and skills strategies that demonstrate to business and foreign investors that there is a cohesive plan to grow the UK economy. Make UK is forecasting that manufacturing will contract by -0.5% in 2025, down from a forecast of -0.2% in the last quarter, before growing by 1% in 2026. GDP is forecast to grow by 1% in 2025 and 1.5% in 2026. Dawn Huntrod, Region Director at Make UK in the North, said: “This has been a strong start to the year for manufacturers in Yorkshire & Humber with the region bucking the national picture. To build on this it’s now essential that Government brings forward an industrial strategy at the earliest opportunity. This will give manufacturers the confidence to plan for the future with a stable, supportive policy environment.” Steve Talbot, Head of Manufacturing at BDO across Yorkshire & Humber, said: “Manufacturers across Yorkshire & Humber rely on manufacturing, particularly the demand for metal products. It’s encouraging to see the sector across the region looking ahead with positive growth intentions, but we cannot be complacent – our manufacturers are resilient but they’re not invincible. “Manufacturers across Yorkshire & Humber now need targeted support from government, whether that be reducing complexity, streamlining trade or boosting access to capital to enable them to focus on growth.”