Historically a consistent second to the EU, the US’ diminished appeal comes as six in ten UK firms anticipate a decline in export volumes to the country. A similar share (63 per cent) expects their business to suffer due to tariffs, while nearly a third (30 per cent) are reconsidering their supply chain sources, revealed the survey.
The findings aligned with separate data from the National Association of Manufacturers, which showed optimism among US manufacturers has plunged to its lowest level since the pandemic. A striking 77 per cent of American manufacturers identified trade uncertainty as their primary concern.
UK manufacturers have dropped US from their top 3 export markets for the first time, as firms shift focus to Asia/Oceania and the Middle East amid tariffs and uncertainty.
Make UK slashed its 2026 growth forecast to -0.5 per cent, citing high energy costs and weak investment.
Despite Q2 output rebounding to 9 per cent, investment intentions remain fragile, with future growth at risk.
The outlook for UK manufacturing appears increasingly bleak. Make UK has slashed its 2026 manufacturing growth forecast from 1 per cent to -0.5 per cent, following an expected contraction of -0.2 per cent in 2025 and stagnation in 2024. The data points to a worrying trend of prolonged industrial decline.
Make UK has urged the government to prioritise a robust industrial strategy, warning that the UK’s high industrial energy costs must be tackled to reverse the sector’s downturn.
“While at first glance the headline numbers may not look too bad, manufacturers are facing a gathering storm of huge uncertainty in one of their major markets, a skills crisis and eye watering energy costs which are providing a harsh reality for many,” said Seamus Nevin, chief economist at Make UK.
“In response, it is essential that the forthcoming industrial strategy takes bold measures to bring down the cost of energy and takes equally radical action to ensure companies can access the people they need to take advantage of a more competitive landscape. If these two issues are not addressed, then we will face the serious prospect of the UK accelerating into de-industrialisation,” added Nevin.
“This quarter’s results are a testament to the increasingly challenging landscape our British manufacturers are operating in. The forecasted decline in growth is concerning and the delayed industrial strategy won’t help to assuage uncertainty in the sector,” said Richard Austin, head of manufacturing at BDO.
“That said, there remains pockets of positivity. Growing output levels are proof of manufacturer’s resilience and last month’s trade deals should remove barriers as UK companies seek new trading partners and opportunities for growth. As always, they need urgent clarity and targeted investment from the government if this recovery is to continue into next quarter,” added Austin.
The UK manufacturing output rebounded to 9 per cent in Q2 from -1 per cent in Q1, with total orders improving to -2 per cent from -6 per cent, according to the latest manufacturing outlook survey. The export orders rose to 7 per cent, offsetting weak domestic demand (-1 per cent).
Looking ahead, output is forecast to reach 11 per cent, with exports expected to climb to +22 per cent, surpassing long-term averages. However, recruitment remained flat at 1 per cent, and investment intentions continued to slide, falling to 2 per cent from 5 per cent in Q1. Make UK has warned that if this trend persists, investment could turn negative later in 2025—posing risks to much-needed industrial growth.
Fibre2Fashion News Desk (SG)