Jobs in Britain’s manufacturing sector have shrunk for the twelfth month in a row as UK industry suffers a year of gloom since the Budget – and fears grow over the next one.
A closely-watched business survey showed that Labour’s £25 billion national insurance raid, which has pushed up the cost of employing people, was continuing to drive the decline.
It is the latest evidence that the tax hike – which the Chancellor claimed would not affect working people – is in fact taking away jobs.
And it comes as businesses worry that Rachel Reeves will stage another raid when she delivers her second Budget in three weeks’ time.
The purchasing managers’ index (PMI) survey, compiled by financial firm S&P Global, revealed that the overall sector continued to shrink in October, with a reading of 49.7 – on a scale where the 50-mark separates growth from contraction.
That was sharply up from 46.2 but marked the thirteenth month in a row in which the sector has been shrinking.
The manufacturing sector continued to shrink in October
The boost was partly attributed to the restarting of car production at Britain’s Jaguar Land Rover, the UK’s biggest car maker – benefiting not just JLR itself but also the network of smaller firms in its supply chain.
But the bounce could prove short-lived as overall demand remained sluggish, the report found.
Optimism improved overall as some firms expect a recovery by next year – though others reman worried about tariffs and UK tax and spending policy as the Budget looms, and sentiment remains lower than the longer-term average.
Rob Dobson, director at S&P Global Market Intelligence, said: ‘There are concerns the forthcoming Budget will exacerbate the lingering challenges created by last year’s Budget.’
Mr Dobson pointed to the impact of the minimum wage hikes and NI increases ‘on costs, demand and production’.
He added: ‘Manufacturers seem to be stuck in a holding pattern until the domestic policy and geopolitical backdrops exhibit greater clarity.’
The figures come days after a survey from the Institute of Directors revealed that business confidence remains ‘rock bottom’ as firms expect the worst from the Budget.
Meanwhile, a new forecast from the EY ITEM Club has suggested that tax hikes, tariffs and high interest rates will ‘put a brake’ on growth over the coming year.
The forecast, which uses the Treasury’s model of the UK economy, has upgraded the outlook for gross domestic product (GDP) this year but warned it will slow sharply in 2026.
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