Manufacturing sector presses for electricity market reform

9 July 2026

UK manufacturers are warning that rising industrial electricity prices could put production at risk and cost the economy an estimated £85bn a year unless the next government reforms the energy market.

This is according to a report published by industry body Make UK in partnership with energy company Ecotricity.

The report says 90% of manufacturers have seen their energy bills increase since 2022, with more than half identifying energy costs as the biggest challenge facing their business over the coming years.

It also finds that 13% of firms believe further rises in energy costs could threaten their survival. Make UK estimates that a 13% fall in manufacturing activity would result in an annual £85bn hit to the UK economy, including around £50bn across supply chains.

The report argues that electricity prices remain artificially high because gas continues to set the wholesale price of power for much of the market. It also points to policy levies on electricity bills, slow grid connections, ageing infrastructure and post-Brexit trading arrangements as factors increasing costs for industry.

Seven in ten manufacturers surveyed said they had passed higher energy costs on to customers, while the report says rising bills are also delaying investment decisions.

Despite the pressure, manufacturers continue to back decarbonisation. Nearly three-quarters of respondents said a renewables-led electricity system would deliver lower power prices, while 71% said net zero remained important to their business. The survey also found that almost nine in ten companies have introduced energy efficiency measures, 63% have begun electrification projects and 87% would invest more if the price gap between gas and electricity narrowed.

Ecotricity founder founder Dale Vince comments:

“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 over priced 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’.”

Make UK chief executive Stephen Phipson says manufacturers wanted an energy system that would allow them to compete and invest rather than permanent financial support:

“The incoming Government must act quickly. Without urgent action, we risk losing industrial capacity that will be extremely difficult to rebuild.”

Access the report From crisis to stability: A future energy system for manufacturers