The UK Manufacturing Report 2026
Is Britain's Manufacturing Industry In Crisis Or Quietly Thriving?
The State Of UK Manufacturing
UK manufacturing employs 2.6 million people, accounts for nearly half of all exports, and has grown factory output by 27.8% in real terms since 2020. So why does it feel like the sector is always one headline away from collapse?
We pulled Companies House data across nine manufacturing industries, tracking openings and closures from 2020 to 2026, to understand which are thriving and which are surviving for businesses just starting out.
Contents:
The Manufacturing Industries Showing Growth
The chart below shows business registrations and business closures across nine UK manufacturing industries between 2020 and 2025, using Companies House data.
Aerospace: The Standout
New aerospace manufacturing businesses registered in the UK grew 191% between 2020 and 2025 from 103 in 2020 to 300 in 2025. Across the full period, 1,051 companies opened against 726 closures: a net gain of 325 businesses.
Aerospace contributed £6.7bn to UK manufacturing output growth in 2025, with 25% more aircraft delivered than the year before; more than in any of the prior seven years.
The government has designated aerospace a frontier industry in its Modern Industrial Strategy, committing up to £2.3bn to the Aerospace Technology Institute Programme through to 2035. For precision component suppliers up and down the aerospace supply chain, the order pipeline is the longest it's been in over a decade.
Machinery And Electronic Components
General-purpose machinery business registrations rose 120.5% over five years, from 44 new businesses in 2020 to 97 in 2025. Electronic components grew 168.4% over the same time period, from 79 to 212.
In addition, UK manufacturers delivered a 3.4% rise in the value of computer, electronic and electrical products in Q1 2026. Both sectors are benefiting from the same underlying push: UK manufacturing is becoming more technology-intensive, and both are well-placed for it.
Energy: Growth That Doesn't Tell The Whole Story
Energy manufacturing saw the largest percentage growth in new registrations of any sector tracked at 225%, from 8 new businesses in 2020 to 26 in 2025. The absolute numbers are small, and it's worth being clear about what they represent: refined petroleum product manufacturers, not the renewables sector.
However, closures heavily outpaced openings across the same period: 262 closures against 90 openings, a net deficit of 172 businesses. This shows that new entrants keep arriving into a shrinking market.
Metals And Textiles
Both sectors posted strong registration growth, with metals up 92.5% and textiles up 148.5% over five years. Metals (which covers everything from screws and fasteners to railings to shipping containers) saw 2,493 companies open between 2020 and 2025, by far the highest volume of any sector. Textiles added 834 new businesses across the same period.
The catch: closures outpaced openings every single year in both sectors. These are industries with low barriers to entry and brutal operating conditions. Entrepreneurial activity is high; survival rates aren't.
The Industries Surviving In 2026
This chart below takes a snapshot of 2026 so far, comparing the number of companies opened against the number closed in each sector since the turn of the year. A negative figure means closures are outpacing openings, even in sectors with strong long-term growth.
Metals
Metals is the most active sector in this dataset by sheer business formation, with 262 companies opened in 2026 to date. However, it's also the worst performing. 288 businesses have closed in the same period, a deficit of 26. That pattern has been held every year since 2020. The sector consistently generates more new businesses than any other, and consistently loses more too.
The fabricated metals space is intensely competitive, exposed to raw material price swings, and facing sustained pressure from cheaper international production. High energy costs, a recurring theme across UK manufacturing, hit metal fabricators particularly hard. The businesses keep forming. The question is how long they last.
Textiles
97 textile manufacturers have opened so far in 2026. 122 have closed, leaving a deficit of 25. Like metals, this isn't a new trend. Textiles has run a negative net figure every year from 2020 onwards, with total closures across the full five-year period reaching 1,760 against 834 openings.
The sector's persistent churn points to a structural problem rather than a cyclical one. Low barriers to entry bring in new businesses, but high operating costs and intense competition from overseas production flush them back out.
Food Machinery
Food machinery is a smaller sector, but 2026 is quietly going wrong for it. Seven companies have opened so far this year and 23 have closed. That's a deficit of 16 in a sector that managed a net gain of 36 across the full 2020-2025 period, and which saw 93 new registrations in 2023 alone.
The reversal since that 2023 peak has been consistent. 2024 saw more closures than openings for the first time in the dataset, and 2026 is continuing that trend. Food machinery straddles precision engineering and food production; two areas the UK should be strong in. The contraction is worth taking seriously.
Aerospace
As we’ve shown, Aerospace is the sector with the strongest five-year growth record in this dataset, so a negative 2026 figure of 80 openings against 92 closures (a deficit of 12) deserves some context before drawing conclusions.
The global order book remains at record levels, government investment is substantial, and the underlying demand driving new business formation over the past five years hasn't disappeared.
The 2026 dip is likely just volatility, which happens when 300 businesses register in a single year and some don't survive their first. The next 12 months will show whether this is a blip or the start of something more serious.
Defence And Weapons
Four companies opened in weapons and ammunition manufacturing in 2026 and five closed. A deficit of one which may not appear a problem, but for a sector this small, it's consistent with a pattern that has seen closures outpace openings in every year since 2020, bar 2025.
This data only captures a slice of UK defence manufacturing as the largest operators don't show up as new registrations. What these numbers do suggest is that the SME layer of the UK weapons manufacturing supply chain isn't growing, even as defence budgets rise.
What’s Next For UK Manufacturing?
The sectors growing fastest aren't growing by accident. Commercial aircraft orders hit 569 in Q1 2026, up 9% year-on-year, government funding for the ATI runs through 2030, and both electronics and machinery are riding the broader shift towards technology-intensive manufacturing.
Automotive is recovering. Production is forecast to rise more than 10% in 2026, with the potential to reach one million units by 2027, but the supply chain businesses forming now need to be building for electric, not defending legacy ICE production.
The sectors consistently losing more businesses than they gain aren't going to turn that around without something fundamental shifting. E.g costs, competition or demand.
Metals will keep generating new businesses and losing them at roughly the same rate. Textiles will too, unless businesses can compete on quality, speed or sustainability rather than volume. Food machinery's sharp deterioration since 2023 looks macro rather than structural, with high capital costs, and margin pressure, but the direction is consistent enough to take seriously.
Defence is the outlier: spending is committed to reach 2.6% of GDP by 2027, but that money flows to established primes, not the SME layer this data captures.
The split between sectors pulling ahead and sectors falling behind isn't narrowing, if anything, it's becoming more defined.
The industries with government backing, global demand, and a clear technological direction are pulling away, which are fighting a market that keeps working against them.
"This data paints two different pictures of the UK manufacturing sector. Aerospace, electronics and machinery are growing on the back of genuine global demand and some long-term government investment, while metals, textiles and food machinery are stuck in a cycle where the same low barriers that make it easy to start a business also make it hard to survive. Neither story is new, but 2026 has sharpened it. The businesses that adapt, on productivity, technology or specialisation, are the ones still trading after five years."
Alastair Morris
Managing Director @ Accu
"What stands out is how consistent the divide is. Sectors with clear government backing and rising global demand keep pulling further ahead every year, while sectors competing purely on cost or volume (keep losing more businesses) appear to lose more business than they gain. That split won't close on its own. The next few years will reward manufacturers who invest in precision and specialisation over those still competing on price alone."
Dan Jack
CEO @ Accu
For anyone starting a manufacturing business in the UK right now, the sector you choose matters more than it ever has.
The data doesn't tell you whether a specific business will succeed as thousands have opened and closed in every sector here. But it does tell you which sectors are building momentum and which are fighting structural headwinds. That's not a guarantee either way. It's just the clearest picture the numbers can give you.
Methodology
We searched the Companies House database using SIC codes for each of the nine industries in this report.
For companies started in each year, we used the date range example of 01/01/2020 to 31/12/2020 with a status of 'open'. For companies that closed, we used the same date range with status options of 'closed', 'dissolved', and 'liquidation'.
| Industry | SIC Code | Description |
| Aerospace | 30300 | Manufacture of air and spacecraft and related machinery. |
| Automotive | 29100 | Manufacture of motor vehicles. |
| Defence And Weapons | 25400 | Manufacture of weapons and ammunition. |
| Electronic | 26110 | Manufacture of electronic components. |
| Energy | 19201 | Manufacture of refined petroleum products. |
| Food Machinery | 28930 | Manufacture of machinery for food, beverage and tobacco processing. |
| Machinery | 28290 | Manufacture of general-purpose machinery. |
| Metals | 25990 | Manufacture of fabricated metal products. |
| Textiles | 13990 | Manufacture of other textiles. |
All data correct at the time of collection. 2026 figures are year-to-date only.
Primary data source: Companies House