Three prime ministers, four chancellors and three business secretaries in a year have cost Britain its appeal to foreign investors, say manufacturing bosses.
Members of Make UK, the manufacturing trade body, have in previous surveys blamed the impact of Brexit on trade costs and customs barriers. However, it is the government’s management of the economy since Britain left the European Union that is now angering industrial leaders.
“There is evidence that the political instability of the last 12 months has damaged the competitiveness of the UK as a manufacturing location,”said Make UK of its survey published today.
“The number of companies believing the UK to be a competitive location has halved from last year, down to 31 per cent from 63 per cent.”
Make UK continued: “Over four in ten companies, 43 per cent, believe the UK is now less attractive to foreign investors, while more than half of companies, 53 per cent, believe that political instability is damaging business confidence.”
Investment intentions by Make UK member companies have turned negative for the first time in two years, although the body concedes that this will have as much to do with manufacturers’ single biggest worry, which is increasing energy costs and uncertainty over future bills, as about instability at Westminster.
The government will shortly announce its plans for continuing support with energy bills for businesses.
The survey of 235 senior executives, done jointly with PwC, the accountant, found that two thirds of business owners will be reducing production, headcount or both, irrespective of the government’s energy support package.
The energy risk factor is so prominent in their minds that 60 per cent fear blackouts during the rest of the winter. Of the executives questioned, 13 per cent said that they were considering closing their businesses or introducing shutdowns to save on energy bills, while 11 per cent said they were thinking about moving production facilities to other countries where energy is cheaper than in the UK.
“A potent mix of factors is testing the resolve of manufacturers,” said Stephen Phipson, chief executive of Make UK. “Ongoing supply chain disruption, access to labour and high transport costs that show no sign of abating can be added to a growing sense of economic and political uncertainty in their main markets. The biggest risk, however, remains the eye-watering increase in energy costs, which has the clock ticking for many companies.”
He added: “While an extension of the energy relief scheme will be welcome, to date it has just been a sticking plaster. Making it less generous will make the situation worse for many companies. There is a very strong and urgent case for matching the more generous schemes in place elsewhere if we are to maintain a level playing field and not damage our competitiveness.”
Phipson further warned that without proper targeted support “there are some very significant companies that will fall through the cracks”.
In a separate survey, BDO, the advisory firm, has found that, despite a marginal improvement last month, economic output and optimism remains well below historic levels as a cocktail of factors, including supply chain chaos, high inflation and a looming recession, continues to stall business activity.
According to its latest Business Trends report, low confidence and productivity among UK businesses were to blame for driving historic falls in hiring intentions.