UK manufacturers warn of deindustrialisation amid soaring energy costs

A survey by the manufacturers' body Make UK finds that high electricity and gas prices are threatening the country’s industrial base. Energy costs are reported to be twice the level in continental Europe and four times higher than in the United States. The poll shows that one in four manufacturers are considering or have already moved production abroad, while one in ten firms say they are likely to become insolvent within the next year.

Nearly half (46%) of industrial firms have experienced a further rise in energy bills since the Middle East conflict began, and 98% expect a significant squeeze on profitability this quarter. In response, 38% have delayed investment and 21% have cut staff. Stephen Phipson, chief executive of Make UK, warned, “Britain faces deindustrialisation unless manufacturers get relief from high energy prices,” adding that “the time for talking is over. The time for action is now.”

Make UK is urging the Treasury to cover the carbon taxes and levies that make up about 50% of industrial energy bills, citing the approaches used in France and Germany. The existing British Industrial Competitiveness Scheme, which reduces bills by up to 25 % for heavy users, will not take effect until April 2027, a timeline that many firms deem too late.