Despite its critical role in the economy, the UK’s manufacturing sector has been facing growing financial distress for more than 2 years. Last year, the industry recorded over 1,500 insolvencies, making it one of the top three most affected sectors.

This vulnerability continues, as latest data suggests that manufacturing production fell by 0.8% month-over-month in March 2025, underperforming market expectations of a 0.5% drop and reversing a 2.4% gain in February. The biggest drag came from steep declines in the production of computer, electronic, and optical products (-8.4%), pharmaceuticals (-5.8%), and basic metals (-5.1%).

Year-on-year, manufacturing output also declined 0.8%, a sharper fall than the expected 0.5% drop and a reversal from February’s 0.5% rise. This mixed performance highlights ongoing volatility across the sector. 

manufacturing Exports orders and jobs at risk

The country’s manufacturing sector is now facing a storm of economic pressure. According to the latest S&P Global PMI data (April 2025), the UK recorded the steepest drop in manufacturing jobs and export orders among 31 surveyed economies. Employment in UK factories fell at the fastest pace outside of the early 2020 COVID-19 shock, driven by:

• Weaker domestic and international demand
• Increased National Insurance contributions
• A recent hike in the minimum wage

Sky-high electricity prices are also responsible in making UK industries uncompetitive on the global stage. A recent coalition of industry experts, business investors and climate activists have signed a joint letter to Chancellor Rachel Reeves caling for urgent reform, highlighting that UK businesses pay far more for electricity than their European counterparts. This is a key factor contributing to falling export orders and lost contracts. While the government has introduced limited support (like the British Industry Supercharger), it’s nowhere near enough to match the backing provided in the EU or US.

By shifting legacy renewable energy costs to general taxation, electricity prices could drop by £40/MWh. This ~15% reduction in business energy bills, helping manufacturers regain cost competitiveness.

At the same time, UK exporters are struggling with falling global competitiveness, as recent tariff announcements, sluggish demand from key markets, and persistently high prices make British goods harder to sell abroad. Adding to the pressure, UK manufacturers are experiencing the highest goods price inflation of any economy surveyed and some of the worst supply chain delays globally, second only to war-affected Myanmar.

While export declines were also reported in the U.S. and eurozone, the contraction in those regions is easing, whereas the UK’s downturn appears to be accelerating.

Critical Regions in Distress

Insolvency-related activity in the North West surged to a 25-month high in April 2025, signalling growing distress across key industries, particularly manufacturing. 473 companies fell into critical financial distress, making it the highest figure since March 2023 and a 20.4% rise compared to April 2024. Insolvency-related activity includes administrator and liquidator appointments as well as creditors’ meetings.

The North West now leads the UK in insolvency-related cases, ahead of Greater London (436), East Anglia (345), and the West Midlands (236). Much of this distress stems from the region’s deep ties to the manufacturing and construction sectors, both of which are especially exposed to ongoing economic volatility.

Established firms, including long-standing manufacturers, are among those closing shop, struggling to adapt to shifting market conditions and tighter margins. This is already raising wider concerns for the UK’s industrial base, and without intervention, it is bound to falter more. 

Is there a Silver Lining?

Despite the financial distress in the region, savvy investors see the bigger picture: a high-volume shakeout is reshaping oversaturated markets, creating rare opportunities. This environment opens the door for strategic acquisitions as business owners seek support from every possible avenue. Here are some opportunities to explore:

Leverage export market weakness: With export orders plummeting and competitiveness eroding due to tariffs and high prices, identify distressed exporters that can pivot to domestic markets or supply chains. Alternatively, back firms positioned to capitalise on reshoring trends enabled by government incentives.

Engage in distressed debt financing with operational control: Given the rising insolvency trend, deploying capital via distressed debt instruments tied to manufacturing companies can yield control stakes and influence restructuring outcomes directly.

Looks for rising members’ voluntary liquidations (MVLs): Expect an uptick in MVLs as directors respond to rising employer National Insurance and wage costs. MVLs often present clean, asset-rich targets free from creditor claims, ideal for investors seeking quicker, lower-risk entry points into restructuring.

Invest in digital and automation retrofits for legacy manufacturers: Target distressed companies with aging tech infrastructure but solid market positions. Capital infusion for automation or Industry 4.0 upgrades can unlock performance improvements rapidly.

Acquire alternative supply chains: Invest in companies providing localised or alternative supply solutions to manufacturing firms burdened by severe delays. Consider opportunities in logistics startups or inventory fintech focused on the North West manufacturing ecosystem.

Insolvency News | Nolte Möbel UK Files for Administration

The UK division of German bedroom furniture manufacturer Nolte Möbel has entered administration following insolvency proceedings initiated by its parent company.

Nolte Möbel UK filed for administration last month, with Nick Cusack and Paul Bailey of Bailey Ahmad Ltd appointed as co-administrators on May 2. German newspaper Die Rheinpfalz quoted court-appointed legal receiver Steffen Rauschenbusch, describing April as a “disastrous” month, attributing the collapse to challenging market conditions and geopolitical instability.

This move comes after months of financial struggles for the German parent company, which announced its closure at the end of April 2025, impacting around 250 employees. Before administration, Nolte Möbel specialised in fitted furniture including shelving, wardrobes, shoe racks, lighting, mirrors, and drawer blocks.

The company separated from the well-known kitchen supplier Nolte Group in 2020, meaning the administration affects only Nolte Möbel UK and does not impact the wider kitchen-focused Nolte Group or its subsidiaries. Financial difficulties have plagued Nolte Möbel since the split, with several million pounds of debt reportedly written off during the pandemic.

French trade publication Meuble Info reports the parent company will cease operations entirely in July unless a buyer is found. Remaining employees are completing final orders in the coming weeks.