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UK manufacturing must reach 15% of GDP by 2025 as it launches its 10-point plan for reviving British industry, says Institute for Prosperity

London, UK – A leading cross-party think tank has today warned that the UK faces a decade of decline if it fails to increase manufacturing’s value to 15 per cent of gross domestic product (GDP) by 2025.

Launching its bold new manufacturing blueprint, the Institute for Prosperity has outlined 10 key policies needed to revive the UK’s flagging manufacturing sector and, ultimately, the country’s economic growth and prosperity.

Manufacturing and reindustrialisation is key to kick-starting the nation’s major production hubs and levelling up communities across Britain, the Manufacturing Unlocked report has concluded.

But that won’t be possible without wholesale policy changes. The Institute, which has set the UK economy a growth target of three per cent within the next five years, is calling for the Government to take immediate action to:

  1. Rebalance the economy – by increasing manufacturing to 15 per cent of GDP
  2. Restore technical training – by reversing training budget cuts
  3. Reward capital expenditure – by creating incentives through investment allowances
  4. Improve financing – by establishing a National Investment Bank
  5. Provide a return on infrastructure investment – by prioritising projects with the highest social payback
  6. Reduce energy costs – by introducing a Green Investment Allowance
  7. Improve planning – by overhauling current rules to provide space for industrial activity
  8. Increase investment in research and development (R&D) – by introducing R&D allowances
  9. Retain British innovation – by using tax incentives to encourage firms to stay in the UK
  10. Set more ambitious targets – by making Britain the easiest place to set up a manufacturing business

The recovery of the UK’s manufacturing sector is essential for the country as a whole given the declining economy, the disparity between the lowest and highest earners, and the imbalance between the service and product-led industries.

Rt Hon Caroline Flint, Chair of the Institute’s Advisory Board, said: “The Government must act now before it’s too late. Increasing manufacturing output is the only way to ensure that those who have been left behind for so long in Britain’s industrial heartlands can get a leg-up and start working towards a more secure and viable economic future.

“Unlocking our manufacturing potential is vital to levelling up, supporting the regions, rebalancing the economy and increasing prosperity – and we have outlined 10 vital policy changes to better support British manufacturing.”

John Mills, Founder of the Institute, said: “To achieve strong economic growth and make the UK a global powerhouse once more, we need to start with a solid manufacturing base. Our 10 proposed reforms set out today clearly outline the key steps the Government needs to take immediately to achieve economic prosperity.”

UK manufacturing has declined to less than 10 per cent of GDP over the last 40 years, eroded by a lack of support and rapid deindustrialisation, compared to about 20 per cent in countries such as Germany and South Korea.

Among the main asks from the cross-party campaign group is the need for vital demand and supply reforms with a radical reassessment of macroeconomic and exchange rate policy to ensure UK manufacturing maintains its competitive edge on the global stage.

The Government must also reverse drastic cuts to the training budget in order to develop a more skilled workforce and fill areas of critical skills shortages, as well as introducing a national target for school leavers going into further education for technical training.

In addition, they should establish a 'Lifelong Learning' Budget for retraining and reskilling non-graduates, and provide a Manufacturing Careers Advice Service for school leavers and job seekers.

Greater incentives must also be provided to encourage capital expenditure, while the Government needs to renew its collaboration with industry as a guarantor on investments and loans.

The raft of proposed measures also stipulates that a National Investment Bank should be set up with the aim of closing the inequality gap across the UK and investing in this manufacturing resurgence.

Government investment needs to be prioritised on projects with the highest rate of social return, while long-term infrastructure investment should be rewarded over short-term investments. Details of the percentage of Government-procured products and materials manufactured in the UK should also be published.

The Institute has also called for the introduction of a green investment allowance to encourage capital investment in energy-saving processes, while sharing the costs of climate change mitigation among consumers and taxpayers as well as businesses.

Other requirements include supporting a Carbon Border Adjustment to ensure domestic businesses aren’t unfairly beaten on price and raising R&D expenditure in line with an average comparable with other member countries of the Organisation for Economic Co-operation and Development.

UK manufacturing has declined to less than 10% of GDP over the last 40 years, eroded by a lack of support and rapid deindustrialisation, compared to about 20% in countries such as Germany and South Korea.

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From The John Mills Institute for Prosperity

Updates from the John Mills Institute for Prosperity.


“To increase prosperity, growth and equality by putting a more successful economic future at the heart of British political discourse.”