Finance
UK factories pick up a bit of speed but outlook worries remain
Published by Global Banking & Finance Review®
Posted on January 2, 2026
2 min readLast updated: January 20, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on January 2, 2026
2 min readLast updated: January 20, 2026
UK factories saw growth in December, driven by stock-building and easing budget concerns, but economic worries persist with high costs and taxation.
LONDON, Jan 2 (Reuters) - Britain's factory sector grew at its fastest pace in 15 months in December, though by less than previously thought, while confidence dipped despite some relief over finance minister Rachel Reeves' budget, a survey showed on Friday.
The S&P Global Purchasing Managers' Index for manufacturing rose to 50.6, up from 50.2 in November but below an initial "flash" reading for December of 51.2.
Prior to November, the PMI had been in contraction territory for 13 months in a row.
Stock-building accounted for some of December's growth and the survey added to the picture of an economy struggling to find momentum in late 2025.
The Bank of England last month forecast zero growth in the fourth quarter when businesses were awaiting possible new tax increases in Reeves' budget in late November.
She announced 26 billion pounds ($35 billion) of tax hikes but delayed most of them and largely spared businesses, unlike in her first budget in 2024.
New orders grew in December, albeit only slightly, for the first time since September 2024. And there were signs of stabilisation in exports and hiring, which have been weak, the PMI showed.
Rob Dobson, director at S&P Global Market Intelligence, said that in addition to the end of uncertainty about the budget, factories had been helped by carmaker Jaguar Land Rover returning to normal after a cyber-attack shutdown.
"The start of 2026 will show if growth can be sustained after these temporary boosts subside," Dobson said.
Last month's interest rate cut by the BoE might help demand, he said, but the PMI's measure of business optimism fell in December for the first time in three months.
High costs, increased taxation, reduced international competitiveness, geopolitical uncertainty and the possible impact of government policies were listed as causes for concern.
The survey's measures of inflation picked up. Businesses pointed to higher labour costs, which rose when Reeves hiked a payroll tax in her 2024 budget, for their higher prices.
A final PMI for Britain's services sector is due to be released on Tuesday. The preliminary version of that survey touched its highest in two months.
($1 = 0.7412 pounds)
(Writing by William Schomberg; Editing by Joe Bavier)
Economic growth refers to the increase in the production of goods and services in an economy over a specific period, typically measured by the rise in Gross Domestic Product (GDP).
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured by the Consumer Price Index (CPI).
New orders in manufacturing refer to the total value of new purchase orders placed with manufacturers, indicating future production levels and demand in the economy.
Stock-building is the process of increasing inventory levels in anticipation of future demand. It can indicate business confidence and expectations of economic growth.
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