Energy costs threaten UK manufacturing, report warns
High electricity prices could put UK factories at risk and undermine future investment unless the next Government acts quickly to reduce industrial energy costs, a new report has warned.
Published by Make UK in partnership with Ecotricity, From Crisis to Stability: A Future Energy System for Manufacturers found that 90% of manufacturers surveyed had seen energy bills rise since 2022, while more than half identified energy costs as their biggest challenge in the coming years.
Perhaps more concerningly, 13% warned that further projected energy price increases could threaten the survival of their operations. Based on a potential 13% decline in manufacturing activity, Make UK estimated the resulting loss to the wider economy could reach £85bn annually, including around £50bn across supply chains and related economic activity.
However, the report suggested manufacturers remain committed to investing in cleaner energy. Almost three quarters of respondents believed a renewable-led power system offered a route to cheaper electricity, while 71% said net zero remained important to their operations.
Nearly nine in ten manufacturers had started or were progressing energy efficiency measures, with 63% taking steps towards electrification. Some 87% said they would invest further if the price gap between gas and electricity was reduced.
Make UK is calling on the incoming Government to accelerate support for industry, including bringing forward the British Industrial Competitiveness Scheme, moving electricity policy levies into general taxation and providing further support for green investment and electrification.
Stephen Phipson CBE, CEO of Make UK, said manufacturers were “not asking for permanent subsidy”, but for an energy system that allowed businesses to “compete, invest and grow in the UK”.
The report, based on a survey of 124 manufacturing companies alongside wider energy market analysis, also called for reform of the electricity market and grid infrastructure, including action to reduce the influence of gas prices on electricity costs.
