Budget 2026: Manufacturers need investment, skills and certainty to power growth

As the Chancellor prepares to deliver the 2026 Autumn Budget, Sumer, a UK SME-focused accountancy and business advisory group, is calling for measures that help manufacturers invest, innovate and compete in an increasingly challenging global environment.

Drawing on insights from its manufacturing specialists, Sumer says manufacturers are keen to see a Budget that provides long-term certainty, supports capital investment and addresses the skills shortages that continue to constrain growth.

While many businesses have demonstrated resilience in the face of rising costs, supply chain disruption and economic uncertainty, manufacturers remain under pressure to improve productivity, embrace new technologies and strengthen their international competitiveness.

Dr Phil Chambers (pictured), Associate Partner and Head of Innovation Tax Reliefs at Sumer Northern Ireland, believes the Budget presents an opportunity to build confidence and encourage investment across the sector: “Manufacturers are continuing to navigate significant challenges, from rising operating costs and labour shortages to uncertainty around global markets. What businesses need now is a stable policy environment that gives them the confidence to invest for the long term. The UK has world-class manufacturing capabilities, particularly among its SMEs, but businesses need clarity and consistency if they are to commit capital to new equipment, technology and growth plans.”

Investment remains a key priority for manufacturers seeking to improve efficiency and productivity. Many businesses are looking to modernise operations through automation, digital systems and emerging technologies, but concerns remain around the cost of investment and the pace of return.

Phil believes the Government should continue to encourage businesses to invest in productivity-enhancing assets: “Investment incentives play an important role in helping manufacturers modernise. Following several years of reform to the R&D tax relief landscape, manufacturers would welcome a period of stability. Businesses need confidence that the incentives available today will remain in place long enough to support long-term investment decisions. We do not expect any wholesale changes in the Budget, and that continuity would be positive for the sector.”

He continues: “R&D tax relief and the Patent Box regime remain important tools for encouraging innovation, helping manufacturers invest in new products, processes and technologies while improving the commercial returns from intellectual property developed in the UK. Maintaining these incentives will be key to supporting productivity, competitiveness and economic growth.”

Alongside investment, workforce shortages remain one of the biggest concerns facing manufacturers across the UK. Many businesses continue to report difficulties recruiting people with the technical, engineering and digital skills required to support growth and technological advancement.

James Hallett (pictured below), Partner at Simmons Gainsford, part of the Sumer Group, says tackling the skills gap must remain a priority: “Manufacturing is evolving rapidly, particularly as businesses adopt automation, advanced technologies and AI-driven processes. The challenge is ensuring the workforce develops at the same pace.  We would like to see continued support for apprenticeships, technical training and employer-led skills initiatives that help businesses access the talent they need both now and in the future.”

Sumer specialist advisers believe strengthening the skills pipeline will be essential if the UK is to maximise the benefits of investment in advanced manufacturing technologies and also highlight the importance of innovation support for manufacturers seeking to remain competitive in global markets. Research and development activity continues to drive new products, improved processes and greater efficiency, particularly among specialist and high-value manufacturers.

“Many manufacturing SMEs are highly innovative, but innovation requires investment, time and confidence,” states Phil. “Any measures that encourage research and development and help businesses commercialise innovation will support long-term economic growth.”

Manufactures continue to face upward cost pressures from the ongoing conflict in the Middle East, both directly from energy costs and from input costs arising as a result.

“Energy costs remain a key concern across the sector,” adds James. “While the British Industrial Competitiveness Scheme  is a valuable relief, widening its scope to include more sectors and products, would be hugely welcome at this time and a signal of the government’s commitment to the sector and the growth agenda.”

As a champion of SMEs, Sumer believes the manufacturing sector does not necessarily require a raft of new policies. Instead, businesses are seeking a coherent strategy that supports investment, innovation and workforce development while providing greater certainty for long-term decision-making.

With manufacturing continuing to play a crucial role in driving productivity, regional growth and economic resilience, Sumer says the Autumn Budget should focus on creating the conditions that allow businesses to invest with confidence and seize future opportunities.

“Manufacturers can act now by reviewing the innovation already taking place within their businesses,” concludes Phil. “Potentially qualifying R&D can be overlooked within wider product and process development. Bringing technical teams and advisers together early, and maintaining clear records of technical challenges, development work and associated costs, helps identify qualifying activities and build robust claims. Understanding the support available through R&D tax relief and, where relevant, Patent Box can help businesses make informed investment decisions and support long-term growth”.