Government Invest in Manufacturing Industry to “Boost Economic Growth”

Government Invest in Manufacturing Industry to “Boost Economic Growth”

The UK government has announced a £4.5 billion package to support the UK manufacturing sectors. This follows reports that the industry faced its biggest downturn since the financial crisis. The funding aims to boost economic growth, enhance energy security, and promote the levelling-up agenda. An allocation of over £2 billion has been earmarked for the automotive industry, while £975 million will be directed towards aerospace. These investments will support the manufacturing, supply chain, and development of zero-emission vehicles, as well as the advancement of energy-efficient and zero-carbon aircraft equipment.

In addition to the automotive and aerospace sectors, the government has committed £960 million to a Green Industries Growth Accelerator, which aims to bolster clean energy manufacturing. Furthermore, £520 million will be allocated to life sciences manufacturing, with the goal of building resilience for future health emergencies and capitalizing on the UK’s world-leading research and development capabilities.

The funding is targeted at the UK’s strongest sectors, including those undergoing fundamental changes to remain at the forefront of the global transition to net zero, such as the automotive industry’s shift towards zero-emission vehicles. These investments are part of the government’s broader support for the manufacturing sector, which plays a significant role in the UK economy, accounting for over 43% of all UK exports and employing approximately 2.6 million people.

The Treasury forecasts that this funding is expected to unlock private investment, as investors will presume more certainty and security. The package comes in tandem with an extension of the existing tax break for investment in capital equipment.

The tax break announced by the chancellor, worth £11 billion annually by 2028-29, has been described by Hunt as the largest business tax cut in modern British history. Under this policy, companies can deduct the entire cost of machinery investments from their profits, effectively receiving a 25p return for every pound invested. Initially introduced as a temporary tax break in 2021, it was extended to 2026 and has now been made permanent in response to demands from businesses.

Manufacturers have broadly welcomed these measures, seeing them as a recognition of the strategic importance of the sector. Amidst increasing challenges from regulation, skills shortages, and foreign markets, funding and tax breaks will begin to help the sector start a process of regrowth. Others have emphasised that the government’s focus should not stop here, calling for more legislative change and even a ‘Minister for Manufacturing’.




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