North West ‘most optimistic’ region for manufacturing growth, according to MHA’s 2026 Manufacturing Report

• 90% of North West manufacturers expect growth above 3% in the next 12 months, up from 76% in 2025, making it the most optimistic UK region
• Cyber security is now the top challenge for NW manufacturers at 46%, followed by supply chain at 42% and keeping pace with technological evolution at 40%
• Tax increases have fallen as a leading concern, down from 39% in 2025 to 23% in 2026

North West manufacturers are more confident about the year ahead than they were 12 months ago, with new research from accountancy and advisory firm MHA pointing to a sector that is continuing to invest despite rising operational pressures and an ongoing backdrop of global macro-economic uncertainty.

MHA’s Manufacturing Report 2026 shows 81% of the 1,000 manufacturing bosses surveyed nationally last month expect growth above 3% in the next 12 months, up from 77% in 2025, while 26% expect growth above 5%, compared with 22% last year.

The survey included responses from 141 manufacturing company executives in the North West, 90% of whom said they expected to grow by more than 3% and 50.4% expecting growth above 5%. The data makes the North West the region where manufacturers are the most optimistic about achieving growth.

That stronger outlook is being matched by continued investment in research and development, technology and AI, even as supply chain disruption, cybersecurity and energy costs remain major concerns.

Manufacturers’ biggest risks are increasingly operational in nature. In the North West, cyber security is cited by 46% of respondents, up from 26% in 2025, supply chain concerns by 42%, up from 32%, and technological evolution by 40%, compared with 39% last year. By contrast, tax has become less immediate as a pressure point, falling from 33% in 2025 to 23% in 2026.

The findings suggest manufacturers are taking a more targeted approach to resilience, combining investment in technology, skills and operations while responding to different regional and business pressures.

Andrew Matthews, partner in the North West at MHA, said: “Manufacturers remain optimistic, but that optimism is grounded in reality. Businesses are still dealing with geopolitical uncertainty, cost pressure and skills shortages, yet they are continuing to invest, innovate and plan for growth rather than retreating.”

He added: “That confidence is not evenly spread. Regional differences are clear, with some manufacturers focused on strengthening core operations and others moving faster on automation, digital adoption and AI. The message for policymakers is equally clear, businesses need a stable, long-term framework that supports investment and reflects realities on the ground.”

North West manufacturers are responding in practical ways, with 51% prioritising investment in new technology, including AI, and strengthening IT systems. The findings also point to a broader workforce strategy, with firms placing greater emphasis on upskilling, partnerships and building in-house expertise rather than job cuts. Only 15% of the region’s manufacturers plan to reduce headcount, down from 21% last year.

Andrew commented: “While we know that conditions are still tough, it’s great to see the growing confidence among the North West manufacturing businesses that responded to our survey, and that they are taking proactive steps to overcome challenges and achieve growth.”

Regional differences remain clear

According to the data, the North West remains one of the most optimistic regions, while the West Midlands is more downbeat, highlighting an uneven picture across the UK. The report also points to a more differentiated approach to workforce planning, with traditional manufacturing regions focused on apprenticeships and partnerships, while higher-cost regions place greater emphasis on automation and digital substitution.

R&D budgets are expected to rise by around 5% on average, with stronger sentiment in the East Midlands, North West and among larger firms. Investment priorities differ by region, with London and the South East showing stronger focus on technology, AI and IT systems, while the Midlands, North West and Wales place greater emphasis on machinery, equipment and process improvement.

Business size also shapes the pressure points. Cybersecurity is the top concern for smaller firms, skills shortages are most acute for mid-sized businesses, and larger manufacturers are more focused on supply chain risk. Across the sector, firms are generally prioritising operational efficiency and non-people cost reduction ahead of more disruptive measures such as redundancies.

Regional market dynamics also influence how businesses manage cost pressure. Export-oriented manufacturers are more likely to absorb higher costs through margins, while those serving domestic markets are more likely to pass costs on to consumers. The findings also underline the importance of access to finance, with lending continuing to support investment in automation, supply chains, energy efficiency and digital transformation.

Policy certainty remains critical

Despite the announcement on the government’s Industrial Strategy in June last year, businesses continue to call for practical support on skills, energy affordability, access to finance and friction-free trade, alongside a stable long-term policy framework that gives firms confidence to invest. The Industrial Strategy will be judged on whether it delivers that consistency across regions and sectors.

Andrew added: “The global backdrop remains uncertain, but the response from manufacturers is not hesitation. Firms are tackling immediate pressures while continuing to invest for the future.”

“The challenge now is to strike the right balance between supportive, consistent intervention and the flexibility businesses need to innovate and grow.”