As Rachel Reeves prepares to deliver her Budget on November 26th, there is no sugar coating the challenges she faces.
Growth in the UK economy slipped back to just 0.1% in the third quarter of 2025 and while the longer-term prospects for the economy remain relatively positive, the Chancellor will have to tread carefully so as not to squeeze economic activity any further.
The mood across many sectors is undoubtedly heavy at present. Whether it’s the automotive supply chain battered by recent disruptions at major OEMs, construction volumes slumping or the demand evaporating for discretionary products like garden furniture, there has not been too much good news in recent months.
This uncertainty is being reflected in various macro indicators with the latest UK manufacturing Purchasing Managers’ Index (PMI) rising to 49.7 in October 2025 – the first increase in a year although still below the 50.0 threshold for growth.
The construction sector is also currently experiencing a sustained downturn, although its decline has been slowing in recent months.
There was also a dip in year-on-year UK timber imports for the first half of 2025 with the latest AFRY index shows a 0.6% rise in UK pallet timber prices, although this price rise has come without underlying demand improving.
At the same time, reuse of wooden pallets in the UK climbed again in 2024 (up 11% year-on-year) – good for sustainability, but a sure signal of cost and efficiency pressures generally.
Responding to challenging times
At Nicklin Transit Packaging, we’re leaning into the challenges rather than being overwhelmed by them. We remain committed to investment while focusing on maintaining a strong value-proposition, ensuring efficient operations and service reliability for customers who themselves are under pressure.
We are continuing to upgrade our production lines so we can serve our key sectors as well as respond to new opportunities with greater flexibility. We are also continuing to explore rapidly evolving technology that will enable us to build our capacity
We are working intelligently with customers: the shift in pallet reuse to 53.9 m units inspected/ repaired in the UK is encouraging and shows long-term value in circular supply-chains and we continue to explore closed loop opportunities with a number of our major clients.
Looking ahead
As with any Budget, there will be winners and losers and the Chancellor will have to work very hard to create the confidence in both consumers and industry that will be required to get the economy moving again.
At the very top of the Government’s agenda should be a clear stimulus for house building and a roadmap for hitting its target of 1.5 million new homes by 2029, a target it is going to fall woefully short of with planning permissions currently running at an all-time low.
The Government must also learn from the recent disruption created by the JLR shutdown, which caused a huge amount of damage to the automotive supply chain with little or no central support when it was so desperately needed.
There are many lessons that need to be learned from the recent disruption – not least the importance of robust cyber-security for every business – and going forward the Government should have a clear plan for targeted support in the event of a similar event as the contagion across the manufacturing sector has had a major impact on the wider economy, as we have seen by the recent growth figures.
The Chancellor also needs to focus on confidence building measures for business investment, whether that’s tax-incentives for sustainable manufacturing, sustained investment on filling the on-going skills gap or following the recent rhetoric around the UK’s industrial strategy with real funding and measurable outcomes.
This Budget has to deliver meaningful signals and show the Government is backing growth rather than just managing decline, offering a clear path forward for the Uk economy.
Ultimately it is about building momentum when the momentum is missing. We are turning the dial up on investment, technology and service and hope the Government will make the right moves to support the actions we are taking to ensure that we can see more positive economic signs in 2026.
