The UK Manufacturing Productivity Gap: 40 Statistics (2026)

Every conversation I have about UK manufacturing productivity eventually reaches the same place: someone quotes a statistic, someone else disputes it, and nobody can find the original source.

So I went and found them. Forty statistics, each read on the primary source, each carrying its release date, each linked. Where a number is my own arithmetic rather than a published statistic, I say so. Where two official sources disagree, I show both.

A warning before you scroll: this is not a doom piece. Several of these numbers are good, and one widely-repeated bad-news trend turns out to be running the other way. The point is accuracy, not mood.

Theme 1 — Productivity itself

1. UK output per hour worked rose 0.4% in Q1 2026 compared with Q1 2025, as GVA rose 1.1% against hours worked up 0.7% (ONS, 19 May 2026).

2. Whole-economy output per hour sits 3.5% above its pre-pandemic 2019 average (ONS, May 2026).

3. Manufacturing output per hour, measured against the same 2019 baseline, has grown 1.7% — less than half the whole-economy figure (ONS, May 2026).

4. UK manufacturing supports 2.6 million jobs and contributes £217bn of output (Make UK, UK Manufacturing: The Facts, 29 July 2024).

5. Manufacturing accounts for close to half of all UK exports (Make UK, July 2024).

That third statistic is the whole argument in one line. Manufacturing employs 2.6 million people and has improved its productivity at less than half the rate of the wider economy since 2019.

Theme 2 — Investment, and the divergence nobody is talking about

6. UK business investment was £77,134m in Q1 2026 (chained volume, seasonally adjusted, series NPEL) (ONS, 30 June 2026).

7. Business investment increased by 0.9% in Q1 2026, revised up from a provisional 0.7% (ONS, 30 June 2026).

8. Despite that quarterly rise, business investment remains 1.3% below the same quarter a year earlier (ONS, 30 June 2026).

9. Manufacturing business investment was £7,501m in Q1 2026 — down 7.1% year on year from £8,070m, and down 5.9% on the previous quarter (ONS, 30 June 2026).

10. In current prices the same series is £7,973m, down 3.6% year on year (ONS, 30 June 2026).

11. Whole-economy gross fixed capital formation rose 0.4% in Q1 2026 and sits 1.6% above the same quarter last year (ONS, 30 June 2026).

12. Business investment equated to roughly 10.5% of nominal GDP in Q1 2026. This is my own calculation — series NPEK divided by series YBHA (£780,594m) — not an ONS-published statistic (ONS NPEK, ONS YBHA, both 30 June 2026).

13. On the same calculation, the ratio was 10.58% in 2025 against a 12.29% peak in 1998 — and 9.13% at the 2010 trough (derived from ONS NPEK and YBHA).

The divergence in Exhibit 1 is the single most important number in this article. The wider economy is investing again. Manufacturing is not.

Theme 3 — Energy, where the competitiveness gap is starkest

14. UK non-domestic electricity for medium industrial consumers cost 25.08p per kWh including taxes and levies in the second half of 2025, against an EU14-plus-UK median of 13.69p — the UK is 83.2% above the median (DESNZ, 28 May 2026).

15. German manufacturers paid 16.74p and French manufacturers 10.56p over the same period (DESNZ, 28 May 2026).

16. That makes UK industrial electricity 2.4× the French price and 1.5× the German price (arithmetic on the DESNZ figures above).

17. Finland recorded the lowest price in the comparison at 5.87p per kWh (DESNZ, 28 May 2026).

18. DESNZ states plainly that average non-domestic electricity prices including taxes and levies in the last six months of 2025 were "highest in the UK compared with the EU14 plus UK" (DESNZ, Quarterly Energy Prices, 30 June 2026, p.17).

19. On the wider IEA comparison for calendar 2024, UK industrial electricity was 26.63p per kWh against an IEA median of 16.33p — placing the UK 25th of 25 reporting countries, i.e. the most expensive (DESNZ table 5.3.1, 30 September 2025).

20. There is genuinely good news: the average electricity price paid by the manufacturing industry fell 5.2% year on year to 17.5p per kWh in Q1 2026, and manufacturing gas fell 10.2% to 3.73p (DESNZ, 30 June 2026, p.12 — provisional, subject to revision).

Theme 4 — Labour costs

21. Employer secondary Class 1 National Insurance rose from 13.8% to 15% on 6 April 2025, while the secondary threshold fell from £9,100 to £5,000 a year (HMRC, 13 November 2024).

22. The Employment Allowance more than doubled from £5,000 to £10,500, softening the blow for the smallest employers (HMRC, 13 November 2024).

23. Around 1.2 million employers were affected: 940,000 saw liabilities rise, 250,000 fall, and 820,000 were unchanged (HMRC, 13 November 2024).

24. The package was forecast to raise £23,770m in 2025-26 — economy-wide, not manufacturing-specific (HMRC costings, 13 November 2024).

25. The 15% rate and £5,000 threshold remain in force for 2026-27 (HMRC, updated 5 June 2026).

26. The National Living Wage rose 4.1% to £12.71 an hour from 1 April 2026 for workers aged 21 and over (GOV.UK).

27. The 18–20 rate rose 8.5% to £10.85, and the under-18 and apprentice rate to £8.00 (GOV.UK).

28. S&P Global's Rob Dobson attributed rising input costs directly to policy: "the pass through of the increased Minimum Wage and employer NI contributions continue to work through the supply chain alongside the rising costs for commodities such as metals" (S&P Global, 2 February 2026).

Theme 5 — Conditions on the ground

29. 9% of manufacturers have already moved production overseas because of higher business costs, with a further 16% considering it (Make UK, Manufacturing Outlook 2026 Q2, 15 June 2026).

30. 38% have delayed investment and 21% have reduced headcount (Make UK, 15 June 2026).

31. More than a quarter say they have less than twelve months of cash left, and one in ten say they are likely to become insolvent within a year (Make UK, 15 June 2026).

32. Make UK's investment intentions balance fell from +20% to +15%, even as the output balance rose to +26% (Make UK, 15 June 2026).

33. Make UK downgraded manufacturing growth to +0.4% for 2026 (from 0.9%) and +0.1% for 2027 (Make UK, 15 June 2026).

34. Manufacturers face an estimated £939m a year in additional business rates from April 2026, with 55% of manufacturing properties carrying rateable values above £100,000 (Make UK analysis, 7 April 2026).

35. Against all of that, the S&P Global UK Manufacturing PMI registered 52.8 in July 2026 — expansion, and a two-month high, with the output index at a 22-month high of 53.6 (S&P Global flash, 24 July 2026).

36. The PMI has now signalled expansion in each of the past eight months (S&P Global, 1 July 2026).

37. Mid-market manufacturers recorded an index of 53.7 in June 2026, with output growth at its fastest pace since May 2022 (NatWest, 23 July 2026).

38. Manufacturing insolvencies totalled 1,857 in the twelve months to June 2026 — 8% of cases where industry was captured, and the sixth-highest sector behind construction on 3,805 (The Insolvency Service, 17 July 2026).

Theme 6 — Skills

39. Manufacturing vacancies stand at 48,000, with firms prioritising retraining in leadership and management (66%), higher-level technical skills (58%), digital skills (37%) and data analytics (29%) (Make UK / PwC Executive Survey 2026).

40. The barriers manufacturers name are skills and workforce capability (40%), the cost of transformation (38%) and legacy systems and processes (38%) (Make UK Manufacturing Outlook 2026 Q1).

Note what that last statistic contains. Two of the three top barriers — cost of transformation and legacy systems — are exactly the obstacles that kill AI projects before they deliver anything. The third is a hiring problem that automation is supposed to relieve.

The tax change almost nobody has written about

This one deserves its own section because it changes the arithmetic on every automation business case, and it slipped through with very little coverage.

Full expensing survived. Companies still get a 100% first-year allowance on main-rate plant and machinery and 50% on special-rate expenditure, and the 1 April 2026 sunset was removed, making it permanent (HMRC, 22 November 2023). The OBR estimated permanence would lift business investment by £14bn across the forecast period.

But the fallback changed. From 1 April 2026 the main-rate writing-down allowance dropped from 18% to 14%, with a new 40% first-year allowance available from 1 January 2026 where full expensing and the Annual Investment Allowance do not apply (HMRC, 26 November 2025).

The practical effect: the gap between spend that qualifies for full expensing and spend that does not just got wider. Full expensing requires assets to be new and unused — not second-hand, not gifted, not bought to lease out. So the tax treatment of buying new automation kit versus refurbished or leased equipment has diverged more than most capex models assume. If your business case was built before April, the comparison is now stale.

Methodology and sources

Every statistic above was read on its primary source, not on a summary or a secondary article. Where a figure is my arithmetic on published series rather than a published statistic, it is labelled as such in the text — this applies to items 12, 13 and 16.

What is included. ONS series (business investment, GFCF, productivity, GDP), DESNZ Quarterly Energy Prices and international price tables, HMRC policy papers and costings, The Insolvency Service monthly statistics, Make UK survey and analysis releases, S&P Global PMI press releases, NatWest Business Growth Tracker.

Measurement basis. ONS investment figures are chained volume measures, seasonally adjusted, unless the current-price series is named. Energy comparisons are DESNZ conversions to sterling at market rates; no dollar figures appear anywhere in this article. Survey balances from Make UK are net balances, not percentages of respondents.

What is provisional. Item 20 (Q1 2026 manufacturing energy prices) is a provisional DESNZ estimate subject to revision. Item 35 is a flash PMI estimate based on 9–22 July responses. Items 24, 33 and the OBR £14bn figure are forecasts, not outturns.

Sample sizes. The S&P Global UK Manufacturing PMI panel is approximately 650 manufacturers. Make UK survey sample sizes are not published in the press releases cited.

What I excluded and why. Three figures widely quoted elsewhere are not here. The "92% above European median" energy claim matches no DESNZ semester on record. The MHA Manufacturing Report 2026 figures could not be verified because the source page is inaccessible. And I found no published Make UK estimate of the NICs cost to manufacturing specifically — the £23.77bn in item 24 is economy-wide, and presenting it as a manufacturing number would be wrong.

Where sources disagree. DESNZ's own narrative PDF gives the 2024 IEA median as 15.79p per kWh while its underlying table gives 16.33p. I have used the table figure and linked it. Both support the "highest of 25 reporting countries" statement in item 19.

What to do with this on Monday

Three things.

Check whether your capex model predates April. If it compares new against refurbished or leased equipment using an 18% writing-down allowance, the comparison is wrong. The fallback rate is 14%.

Separate the energy problem from the productivity problem. You cannot negotiate your way to French electricity prices. You can reclaim hours from manual admin that no market model ever counted. Statistic 9 says capital investment is being deferred across the sector — which makes the cheap, fast, non-capital route to capacity more valuable, not less.

Measure your own baseline before quoting anyone else's. None of the forty numbers above tell you what your admin burden costs. Hours per person per week, error rates, quote turnaround — those do, and they are what survive a board meeting. That is what the hidden waste audit is built to produce.

Frequently Asked Questions

Is UK manufacturing productivity improving in 2026?

Slowly. Output per hour rose 0.4% in Q1 2026 year on year (ONS, May 2026), and manufacturing sits 1.7% above its 2019 baseline against 3.5% for the whole economy. Manufacturing is improving, but at less than half the wider economy's rate.

Why is manufacturing investment falling when the economy is investing again?

Manufacturing business investment fell 7.1% year on year to Q1 2026 while whole-economy investment rose 0.9% (ONS, June 2026). Make UK's June 2026 survey points to the cause: 38% of manufacturers have delayed investment, citing energy costs, business rates and labour costs.

How much more do UK manufacturers pay for electricity?

25.08p per kWh including taxes and levies in the second half of 2025, against an EU14 median of 13.69p — 83.2% higher (DESNZ, May 2026). That is 2.4× the French price and 1.5× the German price. On the wider IEA comparison for 2024, the UK ranked most expensive of 25 reporting countries.

Are UK manufacturing insolvencies rising?

No. They have been falling through 2026 — 1,895 in the twelve months to January, 1,886 to February, 1,857 to June (Insolvency Service, July 2026). Manufacturing was the sixth-highest sector, well behind construction.

What changed with capital allowances in April 2026?

Full expensing stayed at 100% and is now permanent. But the main-rate writing-down allowance fell from 18% to 14% on 1 April 2026, and a new 40% first-year allowance became available from 1 January 2026 where full expensing and the AIA do not apply (HMRC, November 2025). This widens the tax gap between new and second-hand or leased equipment.

How many manufacturers are moving production overseas?

9% have already done so because of higher business costs, and a further 16% are considering it (Make UK, June 2026).

Is the outlook actually bad?

It is mixed, and reporting tends to pick a side. The PMI has signalled expansion for eight consecutive months and hit 52.8 in July 2026, with output at a 22-month high. Insolvencies are falling. Energy prices fell year on year. But investment is down 7.1%, a quarter of firms have under twelve months of cash, and Make UK downgraded 2026 growth to +0.4%. Strong output, weak investment.

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