North West manufacturers saw their confidence slump after the Budget as they fear another increase in costs, a new survey has shown.

The Manufacturing Outlook Q4 survey from manufacturing group Make UK and business advisory firm BDO shows confidence fell to its lowest level in a year, with a balance of -6% – meaning more companies were downbeat about the future than were positive.

Meanwhile recruitment intentions took a downturn, while investment by North West companies was flat. Asked about orders for the last three months, local companies were still positive – but the balance stood at just +6%, which MakeUK says was a significant fall on the previous quarter.

This contrasts with the previous survey, when almost six in ten companies (58%) saw a brighter economic outlook under a new Government. Business confidence among manufacturers was also at its highest level in a decade.

The latest research showed 70% of North West manufacturers had seen their costs rise by up to a fifth in the last year, while almost one in ten (8%) had seen their costs rise by up to a half.

The survey showed 86% of companies expected their business costs to rise due to the Make Work Pay reforms, with 44% saying the increase will be ‘significant’.

Following the Budget, Make UK has cut its growth forecasts. It expects manufacturing to contract by -0.2% this year and to grow by just 0.7% in 2025.

The organisation is now calling on the Government to look at ways of offsetting rising costs, including reforms to business rates.

Dawn Huntrod, region director at Make UK in the North, said: “Having faced a cost creep for most of the year, manufacturers in the North West are now facing a cost crisis which has brought a sharp dip in their confidence.

“While overall conditions had begun to gradually improve during the year, the Budget has brought this to a shuddering halt, with the substantial increase in National Insurance Contributions potentially the straw that might break the camel’s back for some. There is now an urgent need for Government to look at other measures which might mitigate the impact of the rocketing costs that businesses are now facing.”

Graham Ellis, head of manufacturing at BDO in the North West, said: “While manufacturers across the North West have welcomed the Government’s Industrial Strategy green paper, optimism across the region is declining, driven by increased input costs and the implications of the latest Budget on employment costs.

“Increasing investment in improving productivity is vital now more than ever to maintain stability and offer opportunities for growth across the North West and the wider sector.”