High energy bills threaten UK industry’s global competitiveness

3 June 2025

UK manufacturers are warning that sky-high energy prices are putting the future of British industry at risk, with costs now 46% higher than the global average.

This figure, highlighted by industry body Make UK, comes as the government prepares to unveil its long-awaited industrial strategy later this month. Businesses and trade groups are calling for urgent reforms to energy pricing to avoid what they describe as a slide toward “renewed de-industrialisation”.

Kelly Becker, president of Schneider Electric UK and Ireland, says high energy prices are “a significant barrier to investment and competitiveness” and must be urgently addressed if the UK wants to remain an industrial leader.

“The UK’s ambition to lead in industrial innovation hinges on tackling these high costs,” she comments. “Advanced manufacturing is a cornerstone of national growth, but energy prices that far exceed the global average are holding our businesses back.”

Becker is calling for urgent investment in national grid infrastructure to support “a plentiful supply of clean energy and accelerate electrification,” but also stresses that reducing demand is just as important. “We already have the technologies to significantly reduce energy demand and improve energy efficiency – now it is about deploying them at scale.”

Manufacturing leaders are pressing ministers to reform complex policy levies, which currently fall heavily on electricity bills, inflating the cost of low-carbon technologies and penalising firms that invest in electrification. Proposals include underwriting fixed energy prices for industry and shifting some green levies from electricity to gas bills to better reflect the UK’s decarbonisation goals.

Becker is urging the government’s forthcoming strategy to deliver “end-to-end support across the supply chain,” and to introduce “targeted measures to bring down electricity costs and incentivise the adoption of clean energy technologies.”

Stephen Phipson, CEO of Make UK, warns: “If we do not address the issue of high industrial energy costs as a priority, we risk the security of our country. We will fail to attract investment in the manufacturing sector. UK manufacturers have faced energy prices far above those of European competitors for many years, undermining their ability to invest, grow, and compete globally,”

Energy UK, representing energy suppliers, supports “rebalancing” charges to reduce the cost of electric heating and boost clean energy adoption. It estimates this could save homes £400 a year and cut government decarbonisation costs by £40bn by 2040.

A government spokesperson quoted in The Guardian said the British Industry Supercharger programme, expected to save firms £5bn over the next decade, is already helping energy-intensive sectors: ““Through our clean power mission, we will get off the rollercoaster of fossil fuel markets – protecting business and household finances with clean, homegrown energy that we control.

“We are also looking at a range of options for longer-term energy market reform, including the rebalancing of gas and electricity prices, with the impact on consumers at the heart of our approach,”