More than a third of UK manufacturers plan to step up investment in response to the government’s new Industrial Strategy, according to the latest annual investment survey from Make UK and RSM UK. The findings suggest the announcement could provide an immediate economic lift, with companies prioritising investment in decarbonisation, AI, and digital technologies.

However, the survey also shows that investment intensity across manufacturing has fallen to its lowest level since the EU Referendum in 2016, raising concerns about the longer-term outlook for industrial growth.

Almost four in ten manufacturers (37%) say their investment decisions are influenced by the availability of tax reliefs. In light of this, Make UK and RSM UK are urging the government to use the upcoming Budget to safeguard and expand vital incentives, while simplifying the process for firms to claim them.

Fhaheen Khan, Senior Economist at Make UK, said the Industrial Strategy is already helping to unlock spending but warned that stability is essential for it to have lasting impact.

“Manufacturers have long called for a clear industrial strategy, and it’s encouraging to see investment projects already being accelerated as a result. But we’re at a crucial moment. The Budget must not only protect current incentives but refine them to target emerging technologies and innovation. Frequent tax changes have created uncertainty — what’s needed now is a stable business tax regime for the lifetime of this Parliament.”

Mike Thornton, Head of Manufacturing at RSM UK, said: “UK manufacturers are optimistic but need government support to invest and grow. Simplifying tax reliefs and making them easier to access would encourage innovation, improve productivity, and drive economic growth through industry.”

The survey also highlights how manufacturers are directing their investment priorities. Over 40% of firms plan to invest in decarbonisation, 35% in data analytics and AI, and 34% in expanding production capacity.

Skills development has now overtaken plant and machinery as the leading investment focus for the year ahead, with 48% of respondents ranking it their top priority compared with 44% for equipment upgrades.

Despite this, overall investment levels remain subdued. Average investment intensity — measured as investment as a percentage of turnover — has dropped to 6.8%, down from 8.1% last year. R&D investment has also edged down slightly, with 68% of companies investing up to 10% of turnover in research and development, and 18% investing between 10% and 50%.

The report concludes that while the Industrial Strategy has already boosted confidence, its long-term success will depend on clear, consistent, and accessible tax policy to ensure manufacturers can continue investing in innovation, skills, and sustainable growth.