Investing to innovate? What’s holding UK manufacturing back?
27/03/2025 Allica Bank Ltd
by Katie Roberts, Allica Bank
A recent article here on Process and Control Today from the team at igus UK outlined the ways in which automation and robotics are fundamentally reshaping process manufacturing in the UK and beyond. Around the world, emerging technologies are speeding up production, allowing for efficiency gains and turbocharging innovation.
The article also however outlined a degree of reluctance on the part of UK manufacturers to embrace these technologies. In fact, the UK has nine times less robotics than Germany, a comparable economy.
The UK has long had a productivity problem and the relatively slow uptake of automation would seem to fit that pattern.
So, where is this reluctance coming from?
Innovation appetite
For the past four years with Allica Bank, I’ve been talking to manufacturing and engineering businesses across the country daily. One thing that’s clear from these conversations is that the sector doesn’t lack an appetite for growth and innovation.
In Q4 last year, my team at Allica surveyed 450 established business owners in the UK to test the country’s innovation appetite. 40% of the businesses we spoke to want to raise investment finance over 2025 and 48% want to leverage emerging technologies in the drive for efficiency and innovation.
The issue I encounter with the businesses I speak to is external factors weighing on these investment decisions. There’s no doubt that business has been tough recently, with inflation and supply chain problems eating at margins. Many businesses are still absorbing increased NI contributions too, and waiting to see what further measures might be announced in the Spring Statement.
While manufacturers can’t control world events or government decisions, they can control who they bank with, and this can make a real difference.
Getting a bad deal
Many manufacturers are currently being given a poor deal by high-street banks. The big six banks focus excessively on the corporate end of the manufacturing market, while overlooking the far more numerous established manufacturing businesses with between 5 and 250 employees.
This can leave these established businesses struggling to raise finance to make growth and business plans a reality. This is despite there being nearly 43,000 established manufacturing businesses across the UK, compared to just 1,200 larger corporate manufacturers.
When it comes to putting business savings to work too, we’ve identified a ‘savings gap’ between the interest big banks offer corporate manufacturers, and what’s offered to the wider manufacturing business community. For businesses with £500,000 saved, this lost interest could amount to around £14,000 per annum. For the UK’s manufacturing sector as a whole, this could mean a loss of more than £600 million - vital cash that could be otherwise reinvested in growth, technology and skills.
Banking beyond the high street
The UK’s established manufacturing businesses are at the forefront of innovation and are key to keeping the UK competitive as the world embraces automation, robotics and the green technologies of the future. As it stands however, the banking sector isn’t always giving these businesses the support they deserve which is impacting investment and innovation.
Thankfully, there are options beyond the high-street banks. The kind of relationship driven business banking which treats each business as an individual is still available. By engaging with these lenders, leaders in the manufacturing industry may find there are ways to finance innovation, from borrowing against assets to generating greater returns on existing capital.
Manufacturing is going through a period of rapid technological change and it’s vital that the UK’s established manufacturing businesses are not left behind. Better business banking can help ensure they aren’t.
Print this articleFor more information, please contact:
Katie Roberts
Allica Bank Ltd
164 Bishopsgate
4th Floor
London
EC2M 4LX
Email: Katie.Roberts@allica.bank
Web: https://www.allica.bank/
Share article:
Process and Control Today are not responsible for the content of submitted or externally produced articles and images. Click here to email us about any errors or omissions contained within this article.