From Crisis to Stability: A Future Energy System for Manufacturers
High energy costs threaten UK manufacturing competitiveness
06.07.2026
High industrial electricity costs could force factory closures and weaken the UK economy unless urgent action is taken, according to a new report from Make UK and Ecotricity Business.
The report, From Crisis to Stability: A Future Energy System for Manufacturers, warns that without reform, the UK risks losing significant industrial capacity and up to £85bn in economic output from reduced manufacturing activity.
- 90% of manufacturers have seen energy bills increase since 2022
- Over half cite energy costs as their biggest business challenge
- 13% warn further price rises could threaten their viability
Seven in ten manufacturers are already passing higher costs onto customers, while investment and margins continue to come under pressure.
Manufacturers point to systemic challenges in the UK energy market, including:
- Gas setting electricity prices too often
- Policy costs added directly to electricity bills
- Delays and inefficiencies in grid connections
- Complex post-Brexit energy trading arrangements
These factors are increasing costs and limiting industrial investment.
Despite pressures, manufacturers are continuing to invest in decarbonisation:
- Nearly three quarters see renewable-led power as the route to cheaper energy
- 71% say net zero is important to their operations
- 87% would invest more if electricity costs were reduced
Many firms are already adopting energy efficiency, electrification and on-site generation.
The report calls for urgent reform to reduce costs and unlock investment, including:
- Bringing forward the British Industrial Competitiveness Scheme
- Moving electricity policy costs into general taxation
- Expanding support for green investment
- Reforming electricity market design and grid connections
- Accelerating investment in low-carbon industrial energy
High energy costs are one of the biggest threats to the future of manufacturing in the UK. Companies want to invest, innovate and decarbonise, but they cannot do so while electricity prices remain internationally uncompetitive.
“The incoming Government must act quickly, ensuring support reaches the whole manufacturing base while investment decisions are being made now. That means delivering the British Industrial Competitiveness Scheme this year, extending it to all manufacturers, and moving policy costs off electricity bills.
“Manufacturers are not asking for permanent subsidy. They are asking for an energy system that allows them to compete, invest and grow in the UK, at a time when wider business cost burdens have already increased significantly since 2024. Without urgent action, we risk losing industrial capacity that will be extremely difficult to rebuild.
Ecotricity has been campaigning for years now - to end the energy market absurdity that sets the price of all electricity to be the same as that from gas. This ‘link’ prevents Britain’s lower cost green energy from bringing down energy bills. It ensures that British manufacturers remain exposed to volatile global gas markets, undermining competitiveness - for no good reason at all.
“The economic case for reform is clear. During the 2023 energy crisis, breaking this link would have saved UK businesses an estimated £30 billion. Inflation could have been 1.5 percentage points lower, Bank of England interest rates almost one percentage point lower, economic growth 0.6 percentage points higher, and the UK economy £36 billion bigger in GDP terms. The link fundamentally undermines our economy, as well as forcing overpriced energy on us.
“British companies continue to face some of the highest energy costs in Europe - our next Prime Minister must seize the opportunity to lift this burden from our whole economy and finally 'break the link’.
Building a cheaper, cleaner energy system
The report concludes that a cheaper, cleaner and more secure energy system is essential to safeguarding UK manufacturing, improving competitiveness and enabling industrial decarbonisation.