The June 2026 Make UK findings remain one of the strongest reasons the deindustrialisation debate has intensified.
Reporting on the survey showed around 9% of manufacturers had already shifted production overseas, with another 16% considering doing so. That produces the widely reported one-in-four figure.
This distinction is important.
It does not mean one in four British factories had already closed or relocated. Instead, it means roughly a quarter of surveyed businesses had either taken overseas action or were examining it.
Even so, the result is significant because moving only one part of a production process can have broader consequences. Tooling, components, specialist suppliers and future investment can follow production overseas once an international manufacturing ecosystem develops.
Make UK’s Q2 survey also found businesses delaying investment and reducing headcounts, while more than half reported that they had yet to experience a benefit from the government’s industrial strategy.
Why Are UK Industrial Energy Costs So Important?
Energy is one of the strongest recurring themes across virtually every major analysis of Britain’s industrial competitiveness.
Official government statistics show that the UK has faced exceptionally high industrial electricity prices compared with other developed economies. The Department for Energy Security and Net Zero publishes international comparisons covering EU and G7 economies, and government policy documents acknowledge that British energy-intensive industries have faced electricity costs above many overseas competitors.
The effect is particularly serious for electricity-intensive activities such as steel, chemicals, ceramics, glass, cement and metals processing.
Consider steel.
Government figures stated that UK steel producers benefiting from the British Industry Supercharger and the previous network-charge support paid about £93 per MWh in 2025, compared with around £69/MWh in France and £60/MWh in Germany. Increasing network-charge compensation from 60% to 90% from April 2026 was expected to reduce the UK figure by another £7–£10/MWh.
The government’s Steel Strategy subsequently assessed supported industrial electricity costs at approximately £86/MWh following the additional relief.
That narrows the gap, but does not necessarily eliminate it.
Why Do Energy Prices Affect More Than Heavy Industry?
High industrial electricity prices do not stop at steelworks or chemical plants.
A manufacturer paying more for energy may increase prices, accept a smaller profit margin, reduce investment, automate more rapidly, cut employment or move energy-intensive operations elsewhere.
Its suppliers can then be affected as well.
This creates a multiplier effect across industrial clusters. A large factory may support transport firms, maintenance contractors, engineering consultancies, component suppliers and specialist service companies located nearby.
Once major production capacity disappears, rebuilding the entire ecosystem can be considerably harder than reopening one building.
This is also why effective supply chain resilience strategies are increasingly important for British businesses.
Are Rising Employment Costs Also Affecting Manufacturers?
Energy is only one part of the competitiveness problem.
Make UK’s latest Q3 2026 report shows employment growth dropping sharply. Its employment balance declined from +15% in Q2 to +3% in Q3, even while the industry continued to report skills shortages.
Make UK argues that higher wages and employment-related compliance costs may partly explain the reluctance to recruit. At the same time, investment intentions increased from +8% to +15%, suggesting some manufacturers remain prepared to spend on productive capacity even while becoming more cautious about expanding workforces.
This creates a difficult industrial equation.
Britain needs engineers, technicians, machinists and other skilled employees to expand advanced manufacturing, but firms must also be confident that each additional employee can generate sufficient value to justify the total cost of employment.
Automation and productivity-enhancing investment therefore become increasingly important.
Is Weak Demand Making the Crisis Worse?
Yes, although the picture changed during the summer.
In July, CBI research showed its manufacturing order-book balance at -45, the joint-lowest reading since the pandemic. Manufacturers reported being squeezed between rising costs and weak demand, restricting their ability to pass higher costs to customers.
By August and September, other indicators were more encouraging.
The UK manufacturing PMI stood at 51.7 in August, remaining above the 50 level associated with expansion. Employment also increased at its fastest rate for more than two years in that particular survey.
Make UK’s subsequent Q3 survey similarly showed domestic and export orders improving.
The important conclusion is that Britain’s industrial difficulties are not explained by one weak month or one recessionary cycle. Structural competitiveness matters because factories make investment decisions over periods of years or decades.
Which Industries Face the Greatest Deindustrialisation Risk?
Energy-intensive manufacturing remains the most immediately exposed.
Steel requires large amounts of power. Chemicals depend heavily on energy and feedstocks. Glass, cement and ceramics rely on high-temperature industrial processes. Metals processing can also carry substantial electricity costs.
Automotive manufacturing faces a different combination of risks, including international trade rules, electric-vehicle investment, supply-chain restructuring and intense competition over where new models and battery capacity should be produced.
Advanced manufacturing is generally better positioned because intellectual property, engineering skills, research facilities and specialist supply chains make relocation more complicated.
But even high-value manufacturers compare countries when deciding where the next production line, laboratory or factory should be built.
That means deindustrialisation can occur not only when an existing factory closes, but when Britain repeatedly loses future investment decisions.
Which UK Regions Are Most Exposed?
Manufacturing is geographically uneven.
House of Commons Library analysis shows that manufacturing plays a substantially greater economic role in the Midlands, northern England and Wales than it does in London. Manufacturing accounts for only about 2% of London’s economic output compared with roughly 9% nationally.
This makes industrial decline a regional issue as much as a national one.
The West Midlands has deep automotive and engineering supply chains. The North West combines chemicals, aerospace, food production and advanced engineering. Yorkshire and the Humber retain significant manufacturing and materials industries, while South Wales has longstanding links with steel and heavy industry.
Individual closures can therefore have consequences far beyond the immediate number of employees involved.
London Business Mag’s reporting on the Glacier Energy Manufacturing administration illustrates how the loss of manufacturing operations can affect skilled jobs and a much longer industrial heritage.
Is Britain Really Becoming a Post-Industrial Economy?
Britain has already become predominantly service-based, but that does not mean manufacturing is economically irrelevant.
Manufacturing contributes disproportionately to exports, business research and development and skilled regional employment. Make UK estimates that manufacturers account for 42% of UK exports and 48% of business R&D, despite manufacturing representing only around a tenth of GDP.
The debate should therefore not be framed as manufacturing versus services.
A competitive economy can excel at financial services, technology, professional services and creative industries while simultaneously maintaining strong advanced manufacturing.
The real danger is losing industrial capabilities that are difficult or expensive to recreate later.
Why Does Deindustrialisation Matter for National Security?
Recent geopolitical shocks have changed the way governments think about domestic industrial capacity.
Supply chains that once appeared efficient can become vulnerabilities during wars, pandemics, shipping disruption or trade disputes.
Steel, defence equipment, pharmaceuticals, energy infrastructure, electronics, critical materials and food production all have strategic dimensions.
Domestic manufacturing cannot make Britain entirely self-sufficient, nor would attempting to manufacture everything domestically necessarily be economically efficient.
But maintaining sufficient capability in strategically important industries reduces the risk that the country becomes dependent on a small number of overseas suppliers for essential products.
This is one reason modern industrial policy increasingly discusses resilience alongside productivity and growth.
What Is the Government Doing About the Crisis?
The UK’s Modern Industrial Strategy is a ten-year programme intended to increase investment in eight growth-driving sectors, including advanced manufacturing.
The government says the strategy is designed to improve investment conditions through measures involving energy, infrastructure, skills, regulation, finance and planning. Its July 2026 one-year update reported progress on investment commitments and sector programmes.
Energy support is a central element.
The government has expanded assistance for highly energy-intensive businesses and is developing wider support through the British Industrial Competitiveness Scheme. A May 2026 government statement said the scheme was intended to benefit more than 10,000 businesses and reduce qualifying electricity costs by up to £40/MWh.
The disagreement is largely about scale and timing.
Manufacturing groups argue that assistance must reach a broader group of businesses quickly enough to affect investment decisions before additional activity is moved abroad.
Has the Industrial Strategy Started Working?
There is not yet enough evidence to deliver a definitive verdict.
Make UK’s Q2 survey was highly critical: more than half of manufacturers surveyed had yet to experience benefits from the strategy and business confidence had fallen sharply.
The September picture is more encouraging.
Make UK’s Q3 report says business confidence improved for the first time in more than a year. UK orders increased, export orders strengthened and investment intentions moved higher. But output growth slowed considerably and employment intentions weakened.
This creates an important benchmark for future policy.
If confidence and investment continue improving while the gap between British and international industrial costs narrows, arguments that Britain can reindustrialise will strengthen.
If factories continue moving production overseas despite those measures, policymakers will face pressure to go further.
Can Britain Reverse Deindustrialisation?
Reversing deindustrialisation does not mean recreating the labour-intensive factories of the 1970s.
Modern factories rely on robotics, artificial intelligence, digital production systems, precision machinery and smaller numbers of highly skilled employees.
The objective should therefore be to increase Britain’s capacity for high-value manufacturing, rather than simply maximise the number of traditional factory jobs.
Britain already has major strengths in aerospace, pharmaceuticals, defence, advanced engineering, motorsport, specialist materials and several clean-energy technologies.
The challenge is converting engineering expertise and research into domestic production at scale.
That depends on competitive energy prices, skilled workers, predictable regulation, access to capital, infrastructure and long-term policy stability.
Is the British Manufacturing Deindustrialisation Crisis Getting Better or Worse?
As of September 2026, the fairest conclusion is that immediate manufacturing conditions have improved from the most alarming period earlier in the year, but the structural competitiveness problem remains unresolved.
June’s Make UK findings were severe: one in four manufacturers had moved activity overseas or were considering doing so, investment was being delayed and confidence was at a four-year low.
By September, confidence, domestic orders, export orders and investment intentions had improved. Official ONS figures also showed manufacturing output growing during the three months to July.
However, employment intentions have weakened, cost pressures remain elevated and industrial electricity prices continue to influence the competitiveness of British production.
That is why one positive quarter cannot settle the deindustrialisation debate.
What Would a Genuine British Manufacturing Recovery Look Like?
A genuine recovery would need to involve more than a temporary increase in factory output.
The stronger signals would be sustained manufacturing investment, fewer businesses considering moving production overseas, stronger recruitment, greater productivity, competitive industrial electricity costs and new factories or production lines being located in Britain.
The most important question is therefore not simply “Did manufacturing output rise this month?”
It is:
Are businesses increasingly choosing Britain when deciding where to invest and manufacture over the next ten or twenty years?
That will ultimately determine whether the British Manufacturing Deindustrialisation Crisis becomes a lasting structural decline or the starting point for a new period of industrial investment.
Conclusion
The British Manufacturing Deindustrialisation Crisis is real as a long-term competitiveness challenge, but the evidence does not support the simplistic idea that British manufacturing is disappearing overnight.
Manufacturing’s share of the UK economy has fallen substantially over several decades, and June 2026 research showing manufacturers moving or considering moving activity overseas provided a serious warning.
High industrial electricity prices remain a central concern, alongside employment costs, skills shortages, weak margins and global competition.
Yet Britain’s industrial outlook is not entirely negative.
Manufacturing output improved in the latest ONS data, orders have strengthened, investment intentions are higher and business confidence has begun recovering. Britain also retains major strengths in advanced, research-intensive and strategically important manufacturing industries.
The next phase will depend on whether improvements in confidence translate into new factories, equipment, skilled jobs and production capacity inside the UK.
If investment continues flowing overseas, today’s concerns about deindustrialisation will look increasingly justified. If energy reform, industrial policy, automation and skills investment make Britain more competitive, 2026 may instead be remembered as the year the seriousness of the problem finally produced a meaningful response.
FAQs
What is the British Manufacturing Deindustrialisation Crisis?
The British Manufacturing Deindustrialisation Crisis refers to concerns about the long-term loss of UK manufacturing capacity, employment, investment and supply chains as businesses confront high costs and international competition.
Are One in Four British Factories Moving Overseas?
No. The more accurate interpretation of the Make UK Q2 2026 research is that around one in four surveyed manufacturers had moved activity overseas or were considering doing so. It does not mean 25% of all UK factories had already closed and relocated.
How Much of the UK Economy is Manufacturing?
Manufacturing represents roughly a tenth of the UK economy. House of Commons Library data showed manufacturing at approximately 9.1% of UK GVA in 2023, while Make UK commonly describes the sector as accounting for around 10% of GDP.
Is UK Manufacturing Growing in 2026?
The latest official figures are mixed but show recent growth. ONS data recorded manufacturing output increasing 0.9% in July 2026 and 0.5% across the three months to July.
Why Are British Manufacturers Considering Moving Overseas?
Major factors include industrial energy prices, employment costs, access to skills, international incentives, supply-chain economics and the overall cost of manufacturing in competing locations.
Can the UK Reverse Deindustrialisation?
Potentially, but a sustainable recovery would require long-term improvements in industrial competitiveness, investment, productivity, skills, energy costs and policy stability rather than a temporary rise in monthly factory output.