Glimmers of hope despite ‘near perfect storm’ for manufacturing sector, says Lancashire adviser

A combination of economic factors has created a ‘near perfect storm’ for the UK manufacturing industry but there are indications of improving fortunes over the coming months, according to a leading Lancashire-based advisor.

Ginni Cooper is manufacturing partner at accountancy and business advisory firm MHA, the UK indepedent member firm of Baker Tilly International.

She was speaking after the release of the S&P Global UK Manufacturing PMI (purchasing manager’s index) data for January 2025.

The index rose to 48.3 last month from the 47 reported for December 2024. Figures above 50 indicate an expansion of the manufacturing sector compared to the previous month and figures below 50 indicate contraction.

Ginni, is based at MHA’s Preston office and provides a range of accountancy, audit and business advisory services to manufacturing and engineering companies across the region.

She said: “Although the rate of decline in manufacturing output has thankfully eased slightly according to the PMI, the sector remains in a fragile state and is currently facing a near perfect storm.

“Increasing labour costs, weak demand in the UK and the EU plus concerns about future tariffs from the US do not make for a happy picture. Price increases for customers are unfortunately inevitable.”

However, Ginni added that many of MHA’s manufacturing and engineering clients were now prepared for the increased costs businesses would face from April. She highlighted that, provided there were no further significant tax changes, companies would now be able to plan for the future with confidence and stability.

“The sector has a reputation for innovation and battling through difficult times,” she said.

“The imminent launch of the long-awaited Industrial Strategy in late March, which we hope will galvanise the sector, and the expectation of interest rate cuts throughout the year in the UK and the EU also suggest there are better times ahead for manufacturers.”

Although Ginni claimed many manufacturing firms would be asking when this was likely to be.

“An interest rate cut this Thursday would be a helpful start,” she said.