# UK becoming less attractive for investment, manufacturers warn
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-01-09
Category: INVESTING
Category URL: https://financedigest.com/category/investing
Meta Title: UK manufacturers warn of decline in competitiveness and
Meta Description: Manufacturers in Britain are struggling with soaring energy costs and political instability, causing a decline in competitiveness and attractiveness to foreign
URL: https://financedigest.com/uk-becoming-less-attractive-for-investment-manufacturers-warnhtml

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By Andy Bruce

LONDON (Reuters) – Britain has become less competitive and less attractive to foreign investors as a result of soaring energy costs and recent political turmoil, manufacturers said in an industry survey released on Monday.

The proportion of manufacturers who think Britain is a competitive location halved to 31% from 63% a year ago, and 43% said Britain had become less attractive to overseas investors, according to the survey by Make UK, the main trade body for British manufacturers, and accountants PwC.

The survey of 235 businesses took [place from Nov](https://www.financedigest.com/glencore-to-place-nordenham-zinc-smelter-on-care-and-maintenance-from-nov-1.html "Glencore to place Nordenham zinc smelter on care and maintenance from Nov 1"). 1 to Nov. 22, when the turmoil of Liz Truss’s short-lived government was fresh in people’s minds, and 53% of [firms said ongoing political instability had damaged business](https://www.financedigest.com/pizza-firm-dp-eurasia-considers-divestment-of-russian-business.html "Pizza firm DP Eurasia considers divestment of Russian business") confidence.

This week finance minister Jeremy Hunt is due to outline plans to sharply [scale back](https://www.financedigest.com/mifid-ii-why-you-should-not-scale-back-your-implementation-efforts.html "MIFID II: WHY YOU SHOULD NOT SCALE BACK YOUR IMPLEMENTATION EFFORTS") energy subsidies for businesses.

Make UK said the plans are likely to lead to exacerbate [cuts to jobs](https://www.financedigest.com/icrc-to-cut-some-1500-jobs-as-humanitarian-budgets-seen-sliding.html "ICRC to cut some 1,500 jobs as humanitarian budgets seen sliding") and production that were already in the pipeline.

When the survey took place in November, two thirds of manufacturers expected to reduce headcount or [cut output because of high energy costs](https://www.financedigest.com/gms-cruise-to-focus-on-cost-cuts-as-it-ramps-up-robotaxis.html "GM’s Cruise to focus on cost cuts as it ramps up robotaxis").

Manufacturers in Britain have struggled of late, with closely-watched S&P [Global business surveys](https://www.financedigest.com/spacex-rocket-sends-first-global-water-survey-mission-into-orbit.html "SpaceX rocket sends first global water survey mission into orbit") showing they suffered a more a severe downturn in December than other Group of Seven nation peers.

The year ahead is going to be very challenging for manufacturers with a potent mix of factors [testing their resolve,”](https://www.financedigest.com/france-strains-to-avert-power-cuts-as-cold-snap-tests-europes-energy-resolve.html "France strains to avert power cuts as cold snap tests Europe’s energy resolve") Stephen Phipson, chief executive of Make UK.

Ongoing supply chain disruption, access to labour and high transport costs which show no sign of abating can be added to a growing sense of [economic and political uncertainty](https://www.financedigest.com/combatting-economic-uncertainty-in-2023-with-the-payments-sector-2.html "Combatting economic uncertainty in 2023 with the payments sector") in their main markets.

Phipson said there was a significant risk that British manufacturers will “fall through the cracks” if the government failed to match the generosity of [energy bill support](https://www.financedigest.com/energy-bill-support-pushes-uk-budget-deficit-to-february-record.html "Energy bill support pushes UK budget deficit to February record") programmes that Britain’s competitors have in place.

The government plans to scale back energy subsidies for businesses will [see the cost of support fall by 85% during the next financial year](https://www.financedigest.com/10-year-david-goliath-crusade-finally-sees-justice-for-off-plan-spanish-property-buyers.html "10 year ‘David & Goliath’ crusade finally sees justice for off-plan Spanish property buyers"), limiting the cost to 5 billion pounds ($6 billion), the Daily Telegraph reported on Friday.

(Reporting by Andy Bruce; editing by David Milliken)


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