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Manufacturers have warned that the UK government must deliver on its promise of an effective industrial strategy to offset rising employment costs imposed by chancellor Rachel Reeves in October’s last Budget.

A post-budget survey of senior manufacturing executives found that 57 percent believed a long-term industrial strategy would lead to increased investment, despite almost all concerns about higher wages and energy costs.

“The pressure on future industrial strategy will be even greater to put investor confidence on a growth path,” warned Make UK, the manufacturers’ lobby.

The high expectations for the industrial strategy come as Whitehall prepares for what government officials will warned could be a brutal spending review, as the UK’s public finances came under increasing pressure from the bond markets last week.

A senior Whitehall official said there was a growing risk of a mismatch between the industry’s expectations of the industrial strategy and what could be delivered, given the lack of government money available for seed funding. except for core missions, such as achieving net zero or improving defenses.

“Unless it’s for tanks or windmills, basically there’s no money,” the Whitehall official said.

The survey of 161 manufacturing executives echoes other leading business groups, including the CBI and British Chambers of Commerceby highlighting the impact of Rachel Reeves’ decision to increase employers’ national insurance contributions.

More than 90 per cent of respondents said employment costs would be their biggest expense for the coming year, as a result of NIC rises, extended employment rights and rises in the national wage.

As a result, the survey found that businesses will look to cut costs and raise prices, increasing inflationary pressures on the economy. “This is painful for their customers and for their staff,” added Make UK.

However, despite the gloomy outlook, the survey indicated “raised optimism” that the planned publication of an industrial strategy in the spring could prove to be “a game changer for of investment”.

The Labor government it announced industrial strategy in October, which published a plan to target eight sectors, including advanced manufacturing, clean energy and life sciences, in a bid to improve investment and drive economic growth.

A senior executive from carmaker Nissan said the publication of the industrial strategy was “crucial for the future” of UK automotive design and manufacturing.

“The global competition for investment is at an all-time high and it is clear that UK manufacturing is at a turning point. Countries that can demonstrate a clear long-term strategy, supported by those policy that promotes an attractive investment environment, will be first in line,” added the Nissan executive.

The strategy will be managed by a 16-member Industrial Strategy Advisory Council chaired by Clare Barclay, chief executive of Microsoft UK. Other members include Rolls-Royce chair Dame Anita Frew and Greg Clarkthe former Conservative business secretary.

Whitehall insiders said the consultation on the shape of the industrial strategy, which closed in November, had attracted a great response from the businesswith more than 3,000 responses submitted to the Department for Business and Trade.

UK chief executive Stephen Phipson said more detail was needed in areas such as skills and regional devolution policy.

“The government has taken a major, positive first step but it must now back it up by setting the immediate and important priorities it can deliver because of the very clear benefits that manufacturers believe,” he added. he.

Industry minister Sarah Jones said she welcomed the confidence shown in the potential of the industrial strategy. “We will continue to do everything we can to promote the UK’s innovative industry to global investors,” he added.

Data visualization by Amy Borrett