Key Findings:
- 56% say the UK has become less attractive for investment as manufacturers face the highest industrial electricity prices in Europe
- 62% of manufacturers considering a major expansion want to prioritise growing in the UK
- Alongside lower energy costs, 35% say a supportive tax environment would influence them to invest more, up from 24% last year
- AI is now on a par with plant and machinery and labour and skills as an investment priority
Manufacturers are urging the Chancellor to use the Autumn Budget to cut industrial energy costs and restore the UK’s investment appeal.
Published ahead of the Budget, Make UK and RSM’s
Investment Monitor 20261 shows both the scale of the challenge facing the Chancellor and manufacturers’ appetite to expand in the UK if conditions do improve.
With the UK facing the highest industrial electricity prices in Europe, 56% of manufacturers believe the country has become less attractive for investment over the past three to five years.
To help address this, Make UK is calling on the Chancellor to move electricity policy levies into general taxation, alongside expanding the British Industrial Competitiveness Scheme (BICS) to all manufacturers and bring forward its implementation.
The prize for improving conditions is clear: of those considering a major increase in capacity over the next 12 to 24 months, 62% still want to prioritise expanding in the UK. Lower energy costs would help turn that ambition into new capacity, jobs and investment.
Energy is not the only barrier, however: more than a third (35%) say a supportive tax environment would encourage them to invest more, up sharply from 24% last year.
The need for action is underlined by manufacturers committing less of their turnover to long-term investment as cost pressures bite. Average spending on plant and machinery has slipped from 6.8% to 6.4% of turnover, while R&D investment has fallen more sharply, from 6.2% to 5.1%.
This squeeze comes as manufacturers face growing pressure to invest in the technologies needed to remain competitive. Two in five (41%) now identify artificial intelligence (AI) as an investment priority, up from 27% last year and placing it alongside plant and machinery and labour and skills for the first time.
The Budget must therefore ease immediate cost pressures while enabling the investment needed for future growth.
Alongside energy cost-cutting measures, Make UK is urging the Chancellor to reverse the cut to the employer National Insurance threshold and extend NIC reliefs to all under-25s, reducing the cost of hiring and giving firms greater confidence to recruit. It is also calling for the Made Smarter scheme to be expanded to support AI adoption and energy efficiency.
Stephen Phipson CBE, Chief Executive of Make UK, said: “This Budget is the first real test of whether the Government can turn its reindustrialisation ambitions into action. Manufacturers want to invest and grow here, but the highest industrial electricity prices in Europe are draining the confidence and headroom they need to do so.
“As I made clear to the Chancellor this week, these costs are shaping decisions on recruitment, production and investment every day. If the Government wants firms to choose Britain for their next factory, production line or AI investment, it must act now.
“That means shifting electricity policy levies into general taxation, expanding BICS to all manufacturers and bringing forward its implementation, while backing firms to adopt the AI, technology and skills that will drive growth across the country.”
Mike Thornton, head of industrials at RSM UK, added: “The Chancellor has a real opportunity to unlock investment in the UK. Targeted support for manufacturers facing persistently high energy costs, such as expanding the BICS scheme, would be a quick win in this week’s budget. It would deliver much-needed relief, boost business confidence and help unlock investment needed to drive growth.”
1Investment Monitor 2026 is published by Make UK in partnership with RSM UK. Read it in full
here.
2The survey of 113 manufacturers was taken in July 2026.
About Make UK
Make UK, The Manufacturers’ Organisation, is the representative voice of UK manufacturing.
Collectively we represent 20,000 companies of all sizes, from start-ups to multinationals, across engineering, manufacturing, technology and the wider industrial sector. Everything we do, from providing essential business support and training to championing manufacturing industry in the UK and the EU, is designed to help British manufacturers compete, innovate and grow.
From HR and employment law and health and safety to environmental and productivity improvement, our advice, expertise and influence enables businesses to remain safe, compliant and future-focused.
About RSM
RSM UK is a leading audit, tax and consulting firm to the UK’s middle market with 5,300 partners and staff operating from 29 locations throughout the UK. For the year ending 31 March 2025, RSM generated revenues of £573m. RSM UK is a member firm of RSM International - the seventh largest global organisation of independent assurance, tax and consulting firms. RSM operates in 120 countries, across 500 offices, with more than 56,000 people internationally. The global organisation’s revenues are US $7.7 billion.
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