Manufacturing companies across Britain are expressing serious concerns about their viability due to elevated energy prices, according to feedback compiled by Make UK, the manufacturers’ trade body. The survey indicates that approximately one-quarter of manufacturing firms have either relocated production overseas or plan to do so in the near term. Additionally, one in ten companies assessed the likelihood of insolvency within the following year as probable or highly probable.
Stephen Phipson, chief executive of Make UK, indicated that while factory output remained relatively stable in the previous quarter, business sentiment had deteriorated significantly. He attributed the pessimism largely to geopolitical tensions in the Middle East and resulting increases in oil and gas prices, noting that confidence levels had reached a four-year low. Phipson emphasized that immediate governmental action was required to prevent what he characterized as industrial decline in the country.
According to the survey, nearly half of industrial companies experienced further increases in energy expenses following the outbreak of regional conflict. Although most firms attempted to offset these increases by raising prices to customers, approximately 98 percent still anticipated substantial reductions in profitability. In response to margin compression, around 38 percent of companies postponed capital expenditures while more than one-fifth reduced their workforce.
Make UK called on the Treasury to assume responsibility for taxes and levies paid by industrial enterprises, citing the practice in France and Germany. Government data indicated that roughly half of industrial energy bills—approximately £3 billion—comprise carbon taxes and levies for grid infrastructure upgrades. While a subsidy program implemented in April provides up to 25 percent bill reductions for qualifying heavy energy users, with expanded provisions taking effect in April 2027, Phipson cautioned that the timing may prove too late for many struggling enterprises.
The UK’s relatively high energy costs stem partly from its greater dependence on gas for electricity generation compared to other European nations. A recent House of Commons report noted that gas represented 30 percent of British electricity generation in 2024, significantly higher than levels in Germany and France. The government indicated plans to review pricing mechanisms but has not yet detailed implementation timelines or specific reform measures.
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