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Is Lack of Funding Sources a Major Problem For UK Manufacturing ?

Is Lack of Funding Sources a Major Problem For UK Manufacturing ?

The Blurbb
May 23, 2024

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Lack of Awareness of Funding Sources a Major Problem For UK Manufacturing Says Report

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Investment is the lifeblood of manufacturing, fuelling growth, innovation, and sustainability. Yet, a recent report by Make UK, NatWest, and Lombard reveals that a significant opportunity for investment, amounting to up to £10 billion, remains untapped due to companies' lack of awareness about available finance options.

The report highlights that this boost in investment could elevate the sector's overall investment potential by up to a fifth, addressing the UK's long-standing productivity weakness. Access to finance was identified as critical for companies' investment plans over the next two years, particularly in key areas such as capital equipment, automation, energy efficiency, and cyber security. These investments are essential for the UK to remain competitive in the global race towards net zero emissions and foster innovation and robotics.

However, despite the potential benefits, barriers to finance persist. More than half of companies are unaware of the range of public finance sources and tailored government schemes available to manufacturers. Additionally, domestic economic and political uncertainties, coupled with the threat of increased costs, deter many manufacturers from accessing finance in the near term.

Fhaheen Khan, Senior Economist at Make UK, emphasises the importance of finance as fuel for manufacturers, enabling continuous investments crucial for navigating a dynamic external environment. Yet, he notes, significant investment opportunities remain untapped due to a lack of awareness of available finance options by most companies.

Different industry leaders across the UK express similar sentiments, pointing out that domestic economic and political uncertainty and the threat of increased costs are also deterring manufacturers from accessing finance in the short term. Dr Jenifer Baxter, CEO of Industry Wales, underscores the necessity of easy access to funding for growing the manufacturing sector, emphasising the importance of simplifying financing processes and reducing business costs.

Laura Capper, Head of Manufacturing and Construction at NatWest, highlights the fundamental role of finance in unlocking investment for growth, innovation, and sustainability. She stresses the need for greater collaboration between manufacturers, lenders, and key stakeholders to provide flexible funding solutions.

In Wales, Paul Butterworth, CEO of Chambers Wales, echoes the importance of access to finance for business growth and development. He highlights the Help to Grow programme through Cardiff University Business School and highly recommends it to SMEs as a valuable business tool for simpler access to financing options.

The report suggests that unlocking manufacturers' investment potential through access to private and public finance sources could generate £9.2 billion in the next twelve months alone. This underscores the crucial role of finance in driving investment, innovation, and growth in the manufacturing sector.

To address the identified challenges, Make UK calls for improved awareness of public and private finance options and schemes such as the Horizon Europe programme, the Government’s flagship management Help to Grow scheme and the British Business Bank. They also propose the establishment of a centralised database supported by AI to streamline access to finance options for manufacturers.

In the future, with more awareness of available finance options and streamlining access to funding, manufacturers can seize investment opportunities and propel the sector towards a more prosperous future.