Make UK survey predicts 'superdeduction' investment boost for manufacturers
6 Apr 2021
The introduction of the 'superdeduction' tax incentive is set to provide a sharp boost to investment this year for manufacturers as companies plan to increase or bring forward their plans in response according to a survey released today by Make UK.
Interestingly, the manufacturers organisation's survey of 149 companies, conducted between 17 and 24 March, reveals that the planned rise in corporation tax appears not to have had a significant impact on either domestic or overseas investment.
However, there remained a need for a longer-term industrial strategy with manufacturing at the heart of plans to recover from the pandemic, given the UK's longstanding poor investment performance, explained Make UK idirector of policy Verity Davidge.
She said: “The Budget has made a clear impact on manufacturers in terms of confidence and they are set to step up their plans to invest in response. For too long the UK’s investment performance has been below par and the incentive should provide a boost in the short-term at least.
“However, one swallow doesn’t make a summer and, with the economy at a crossroad, there remains an urgent need to consider how we make a structural change to investment for the long term. This must be done in the round of an industrial strategy that looks beyond the horizon, plays to the UK’s undoubted strengths in science and innovation and seeks to truly ‘build back better’
The survey reveals more than a fifth (22.6%) of companies said they plan to increase investment as a direct response to the ‘superdeduction’ tax with more than a quarter (28.1%) saying they will bring forward investment plans in response.
Nearly half (48.6%) said there would be no change to their investment plans or their plans were too rigid to change. The superdeduction incentive was also seen by almost a third of companies (32.4%) as the Budget measure which had the biggest impact, followed by the decision to extend the furlough scheme (23.2%) and the boost to R&D (21.2%).
A fifth of manufacturers (19.6%) said the Budget had boosted confidence, with just 3.4% viewing it negatively. The positive response was significantly greater among mid-size companies (41.7%) and larger companies (42.9%).
The survey also shows widespread acceptance of the planned increase in corporation tax; more than half (55.3%) said it would have no impact on overseas or company investment.
More than a quarter (28.4%) thought, though, it would deter foreign investment in the UK while more than one in six companies (16.4%) said it would have a negative impact on their own investment plans.
Conditions for the sector are continuing to improve for the sector overall with almost half of companies (46.9%) reporting improved sales and orders since the year start.
However, more than half of manufacturers surveyed estimate the return to normal trading will take between six months and more than one year.