High energy costs threaten UK manufacturing, investment

By Mehmet Solmaz

BIRMINGHAM, England (AA)—Persistently high energy costs are threatening the future of British manufacturing and broader business investment, industry groups warned.

In a report titled "Cutting Business Energy Costs: The Case for Action," released on Feb. 22, the Confederation of British Industry (CBI) and Energy UK said nearly 90% of firms surveyed have seen energy bills rise over the past five years, and about 40% have scaled back investment in response, undermining the UK’s competitiveness.

The paper calls for a “national strategy” to cut business energy costs and avoid the risk of job losses, production cuts, plant closures, and offshoring.

Electricity prices for businesses remain far above pre-Ukraine war levels, with industry groups noting rates substantially higher than many European peers.

The report argues that current support measures, including targeted subsidies for heavy users, are insufficient and lack coverage for many sectors, limiting growth and deterring investment in clean energy transitions.

In a separate press release, the CBI said high industrial energy prices risk eroding Britain’s competitive position. “When business energy prices are high, British industries become less attractive relative to international competitors, increasing the risk of production shifting overseas and weakening the UK’s trade performance,” the group said.

Manufacturers say high bills are squeezing margins and delaying capital projects, a concern echoed in sector surveys showing weak order books and ongoing price pressures.

Business groups are urging ministers to work with industry to overhaul energy policy, improve infrastructure, and enact measures that lower long-term costs.

They said prompt action is needed to safeguard the UK’s industrial base and maintain its global competitiveness.