The outlook shows growth potential and financial challenges. Rising costs from employers’ National Insurance contributions (NICs), Capital Gains Tax (CGT), and wage hikes will impact hiring, especially for small and medium size-enterprises (SMEs). However, government support through an enhanced Industrial Strategy, Made Smarter funding, and research and development (R&D) investments in high-growth sectors like automotive, aerospace, and life sciences will foster innovation. The full expensing extension, freeze on corporation tax, and stable R&D tax regime create a predictable environment, encouraging long-term planning. This is reflected in increased confidence in strategic investments from our Manufacturing Investment Monitor survey with Make UK. Consequently, we anticipate a rise in sector transactions in 2025 as businesses pursue strategic investments, consolidations and partnerships to mitigate cost pressures and capitalise on growth opportunities. We expect to see:

• Companies continuing to prioritise the divestment of non-core assets to free up capital for investment opportunities and smaller deals.
• The trend towards digital transformation and prioritising data analytics significantly influencing activity as companies enhance efficiency, reduce costs and stay competitive.
• Investments in renewable energy and sustainable technologies thriving as businesses prioritise sustainability and ESG goals.
• Increased M&A activity driven by the push towards automation in manufacturing and industrial processes.