Introduction
Business confidence plummeted to -47% in Q4, a decline of 41 percentage points from Q3, with businesses impacted by measures announced in the Autumn Budget. This is also the lowest score since Q4 2022, when inflation was surging, and the Ukraine war had begun.
The government’s forthcoming Industrial Strategy and Food Strategy must provide an opportunity to build stronger business confidence by unlocking growth and investment opportunities in the UK’s largest manufacturing sector.
-47%
41
Key findings
Growing sales
Growing sales to the UK market remains the top growth priority for 74% of manufacturers, while there’s also a strong focus on foreign markets.
Restructuring operations to maintain competitiveness comes in as a second priority for our sector for close to half of respondents (45%), to respond to cost rises and financially strained households.
Taxation
Taxation is the leading factor constraining investment over the coming year for 54% of respondents, while 52% thought that upcoming regulation will act as a barrier.
Labour shortages
Labour shortages in the sector fell in Q4, with vacancy rates now at 3.6%, a drop from 5.1% in Q3, and slightly above those in wider manufacturing (2.3%) and the UK (2.5%).
This is the lowest vacancy rate since FDF began tracking it in Q1 2022.
Higher labour costs
Facing higher labour costs, 64% of manufacturers report their main motivation for investment is workforce efficiency, aiming to consolidate and increase productivity of their current employees, rather than expanding headcount.
