High energy prices are putting the UK's manufacturing prowess at risk, according to business groups. The country's energy crisis has forced many businesses to cut back on investments, threatening the UK's position as a major manufacturing hub. The report by the CBI and Energy UK highlights the dire situation, emphasizing that the failure to cap prices and upgrade the aging energy infrastructure is undermining British businesses. The report calls for a comprehensive review of outdated energy regulations to stimulate investment and boost economic growth. Energy UK, representing over 100 electricity generators and retailers, reveals that business electricity costs remain 70% higher than pre-Ukraine invasion levels, while gas prices are 60% higher. The survey findings are alarming, with nearly 90% of firms experiencing rising energy bills over the past five years, leading to investment cuts for four out of ten. The report warns that without a reduction in energy bills, the risk of job losses, production cuts, plant closures, and offshoring will escalate. The CBI and Energy UK urge ministers to collaborate with industry leaders to conduct a thorough review of the UK's energy needs and strategies for the net-zero transition. A taskforce, comprising researchers and industry groups, will explore reforms to reduce prices and enhance the efficiency of gas and electricity networks. The aim is to convince ministers that current initiatives are insufficient, and the UK risks widespread deindustrialization due to its high industrial energy prices. The UK's energy prices are among the most expensive in the developed world, almost two-thirds above the median of International Energy Agency (IEA) countries and the highest among G7 members. The impact is evident in the UK's trade in goods, which slumped to its worst performance on record in 2025, with a £248.3bn deficit in goods, a £30.5bn increase from the previous year. The Office for National Statistics notes that the widening gap was only partly offset by a £192bn surplus in services, up £16.4bn from the previous year. The manufacturers' lobby group, Make UK, has previously called for additional government subsidies to prevent the industry from shrinking. Louise Hellem, the CBI's chief economist, highlights the severe financial strain on industrial sectors due to the dramatic rise in energy prices, citing the chemical industry as an example with several closures. This year marks a critical juncture for the UK's industrial strategy, according to Hellem. The report further emphasizes that UK electricity prices for medium-sized businesses are around double the EU median, while non-domestic gas prices are in line with the EU but significantly higher than in the US and Canada. This situation hampers economic growth and discourages businesses from investing in clean energy, undermining the government's key policies. Energy minister Ed Miliband has taken steps to protect major energy users, but concerns remain about the impact on thousands of businesses outside the ringfence. The government's efforts to reduce domestic energy costs are acknowledged, but the support for industrial users is seen as inadequate and funded by other bill payers. Dhara Vyas, the head of Energy UK, emphasizes the importance of lowering prices for all businesses to ensure the UK's growth story remains on track. The initial report highlights the high energy costs' impact on the UK economy and the limitations of existing support measures. The focus will extend beyond bill reduction to a fundamental review of the energy market and regulations to enhance their effectiveness.
