U.K. Manufacturers Call for Investment, Warn of Mass Layoffs

(Bloomberg) -- U.K. manufacturers are calling for added financial support when the government announces spending plans next week, as a survey shows almost 75% of companies in the sector could dismiss workers in the next six months.

The latest poll from industry group Make UK found that 42% of firms now plan redundancies in the period, and almost a third say redundancies are possible. Nearly one in 10 of those surveyed plan to lay off between a quarter and half of their staff.

The U.K. manufacturing sector has already seen some big companies announce job cuts. Rolls-Royce Holdings Plc is set to eliminate 3,000 jobs in Britain this year, while Airbus SE plans to eliminate some 15% of its workforce in the country -- a higher proportion than in France or Germany -- after saying the U.K. government should do more.

Companies have been making use of government furlough plans as demand dries up, but with the program due to end in October many are mulling permanent cuts unless Rishi Sunak, the Chancellor of the Exchequer, offers more support, according to Make UK.

‘Economic Weapons'

“Conditions are still very tough for many companies with disruption likely to continue for some time,” said Make UK Chief Executive Officer Stephen Phipson. “In the short term it's essential that the Chancellor uses the full armory of economic weapons at his disposal to safeguard as many jobs and livelihoods as possible.”

Sunak will address Parliament on July 8 and faces calls to target his spending plans toward the sectors worst affected by the pandemic. There is also speculation he could cut value added tax, though Sunak himself has appeared to play down that prospect.

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The Make UK study, which surveyed 274 companies between June 22 and June 29, found they would like to see business rate and VAT relief announced by the government. Investment was also a priority, as 32% of manufacturers said increased incentives for R&D investments would have an “immediate and positive impact.”

In a more positive sign, the survey also found that two-thirds of manufacturers now expect to be operating between 75-100% of normal by the start of 2021.

Another study suggests that sectors like hospitality are already beginning to recover, with the number of job advertisements in the U.K. increasing in the last week of June. There were 990,000 jobs advertised in the final week of the month, an increase of 27,000 from the beginning of June.

According to the Recruitment & Employment Confederation, which carried out the research, there was a visible jump in the number of vacancies in restaurants and pubs as they prepare to reopen their doors this weekend.

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