Establishing a clear, targeted, balanced and long-term policy for the manufacturing sector.
The UK’s manufacturing sector is vital for the UK economy, accounting for £191bn of output, 53% of total exports and 2.7 million jobs. But it is a sector that has been hit hard by the uncertainty of the Brexit trade negotiations over the past four years, as well as reduction in demand and investment caused by the COVID-19 pandemic.
Investment in the manufacturing sector is crucial to the UK economy. It has a significant multiplier effect for every pound invested and creates skilled, high-quality jobs, as well as further opportunities throughout the extended supply chains.
It also helps to drive innovation, leveraging the talent and knowledge within our world-class university system. This is why we believe it is a sector that should be supported through a clear Government strategy.
A clear strategy for the sector could take many forms and tax is only one of a number of policy areas that can make the UK an attractive place to manufacture. Tax can play a vital role in stimulating the economy, creating jobs and driving desired economic outcomes—and it is a simple policy instrument for the Government to apply.
We believe the Government should look at all the building blocks within the tax system and establish a clear, targeted, balanced and long-term policy for the manufacturing sector. This will give manufacturing businesses and entrepreneurs a clear signal that the UK is a great place to invest in and also assist the Government in achieving many of its stated goals for the post-COVID-19 recovery, including creating a green economy, driving digital innovation and improvements in productivity, and levelling up the north-south economic divide.
In our manufacturing manifesto, we set out what we see as the key requirements for the sector and highlight the changes to the levers within the tax system that the Government should pull in order to stimulate investment and growth. Our six key requirements for the manufacturing sector are:
- Access to skilled workforces
- Access to finance for investments
- Reductions in the cost of manufacturing premises and assets
- Realising the benefits of clustering
- Incentives for entrepreneurs and owner managers
- Support for trading and moving goods globally post-Brexit.
Download our manifesto to read our recommendations for each of these areas.
We encourage the Government to consider these changes in the upcoming Budget and beyond, to create an environment where UK manufacturing can thrive.
We hope you find this paper interesting and thought provoking. If you would like to discuss any of the issues raised, then please get in touch with one of us or your usual BDO Manufacturing adviser.
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