UK manufacturers facing ‘perfect storm’

Rising costs and high levels of debt are among the challenges faced by manufacturing firms over the coming months, Make UK has warned.

In a survey by the industry body, almost half of companies (45%) said their debt levels are higher than at the start of 2020 and six in ten are planning to take on further debt.

Manufacturers are also having to contend with higher input costs, disrupted supply chains and mounting skills shortages.

As a result, for almost half of firms their cash position is worse now than at any point since the pandemic began and a third are worried about their viability in the next two years.

Make UK is urging the UK government to consider payment holidays for the loans that companies took out to get through the pandemic.

“Industry is facing the perfect storm with a raft of rapidly escalating costs combined with significant levels of debt which many companies took on as a precautionary measure just to stay afloat,” said James Brougham, senior economist at Make UK.

“Given the inflationary spiral shows every sign of continuing to climb, many companies fear a tipping point that could make their business models unviable.”