Britain's manufacturing industry is on a "fragile footing" after suffering a "collapse" in domestic demand, a report from Make UK has warned.
Factories are dealing with falling demand while costs are rising, while the prospect of a boost from interest rate cuts this week has been scuppered by the conflict in the Middle East.
The Times reports this has resulted in manufacturers being forced to raise prices, while recruitment levels have fallen behind expectations.
The Manufacturing Outlook report states: “UK manufacturing has begun 2026 on a fragile footing."
Senior economist Fhaheen Khan said: “While output and investment show some improvement after a challenging end to last year, rising costs and weakening domestic demand are creating real pressures for businesses.”
He added that the outlook was “precarious”.
Manufacturing makes up 9% of the UK's GDP, but accounts for 34% of UK exports and 47% of research and development spending.
Make UK's survey found that 31% of respondents were raising their prices in response to the circumstances, the highest proportion since spring 2023.
FSTE100
The UK's flagship share index, the FTSE 100, was up 70 points at 10,292 shortly after opening this morning.
Brent crude oil futures were up 2.01% at $105.91 a barrel.
Companies reporting today
- Marshalls - Full Year Results
- Standard Life - Full Year Results