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45 min ago 3 min read
Manufacturers are warning of an estimated £85bn hit to the UK economy from lost production if the incoming government does not act to reduce industrial electricity prices.
The report, published by trade body Make UK in partnership with green energy supplier Ecotricity, found 90% of manufacturers say their energy bills have increased at least moderately since 2022, while more than half of the companies surveyed identify energy costs as their biggest challenge over the coming years.
Further projected energy cost rises could be life-threatening to operations, according to 13% of firms surveyed. Make UK estimates that a 13% decline in UK manufacturing activity could mean an annual loss of £50bn across supply chains too.Just under half (46%) believe energy costs have increased significantly since the 2022 energy crisis.
Despite these pressures, manufacturers remain committed to net zero and see the transition as a route to greater resilience.
Almost three quarters believe a renewable-led power system is the route to cheaper power, while 71% say net zero is important to their operations.
Nearly 90% have started or are progressing energy efficiency measures, 63% have taken steps towards electrification, and 87% say they would invest more if the gap between gas and electricity prices was reduced. More than a third (40%) say net zero is “very important” to operations.
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One enduring problem is much of the UK energy grid is outdated, meaning it is largely a ‘one-way system’ with electricity flowing from power plants to customers and any excess goes to waste.
Make UK is calling for a successor to the industrial energy transformation fund to support manufacturers investing in electrification and low-carbon technologies.
Stephen Phipson CBE, CEO of Make UK, said high energy costs are one of the biggest threats to the future of manufacturing in the UK. For every £10 MWh reduction in manufacturers’ energy bills the economy could be boosted by £800m annually.
The report calls for a new targeted business rates exemption for investment in green plants and machinery.
“Companies want to invest, innovate and decarbonise, but they cannot do so while electricity prices remain internationally uncompetitive,” he said.
“The incoming government must act quickly, ensuring support reaches the whole manufacturing base while investment decisions are being made now. That means delivering the British industrial competitiveness scheme this year, extending it to all manufacturers, and moving policy costs off electricity bills.
He added manufacturers are not asking for permanent subsidy but an energy system that allows them to compete, invest and grow at a time when wider business cost burdens have already increased significantly since 2024. “Without urgent action, we risk losing industrial capacity that will be extremely difficult to rebuild,” he said.
Alongside immediate price support, the government must focus on how to support investment into green technologies to allow manufacturers to decarbonise their operations and move away from volatile fossil fuel markets, the report adds.
Last week outgoing UK Prime Minister Keir Starmer announced to finance an extra £15bn ($19.8bn) in defence spending.
