UK manufacturers warn £85bn economic hit from soaring energy costs

A report by Make UK in partnership with green‑energy firm Ecotricity warns that more than one in ten UK factories could close if industrial electricity prices keep rising, potentially costing the economy £85 billion a year, including about £50 billion across supply chains. 90 % of the 124 manufacturers surveyed said their energy bills have risen since 2022, and 13 % say further hikes would be life‑threatening to their operations. The surge in costs is being passed on to consumers, delaying investment and prompting staff cuts.

The report calls for immediate policy action: deliver the British Industrial Competitiveness Scheme this year and extend it to all manufacturers, move electricity policy levies onto general taxation, expand green‑investment business‑rates relief, create a successor to the Industrial Energy Transformation Fund, and decouple wholesale electricity prices from gas prices. It also urges grid reforms to prioritise industrial demand and improve connection performance.

Despite the pressures, manufacturers remain committed to net‑zero, with three‑quarters favouring a renewable‑led power system and 87 % saying they would invest more if the gas‑electricity price gap were reduced.