A projected 50% hike in electricity prices by 2020 would damage UK manufacturing, says a report by manufacturers’ organisation EEF, today.
It says it would hit investment, margins and competitiveness.
The warning follows research showing that rising energy costs would see 25% of firms considering investment in facilities outside the UK.
Darrell Matthews, North West EEF director, said: “The tension between the pursuit of low carbon policies and Britain’s ambitions for a better-balanced economy must be resolved.”
Today’s report reveals that 73% of manufacturers say the projected rise in electricity costs would have a noticeable impact on profit margins – 53% say it would hit their competitiveness.
Energy already accounts for 6% or more of turnover for 27% of firms, and affordability is a key concern for 83% of companies.
And while 32% of manufacturers say the UK’s lead in setting ambitious climate targets drives innovation, 41% say it risks undermining competitiveness.
So, EEF is calling on the next Government to ensure that energy policy supports ambitions for a better-balanced economy.
Mr Matthews said: “This is a wake-up call that the tension between the pursuit of low carbon policies and Britain’s ambitions for a better-balanced economy must be resolved.
“Failure to do so could hit investment, margins and competitiveness, putting the brakes on growth and leaving our economy stuck in the slow lane.
“It’s time for a fresh approach. Low carbon is rapidly becoming synonymous with anti-competitive, which is why we are urging all parties vying for government to commit to review and reform current policies and mechanisms.
“Above all, we are seeking a firm commitment to implement the Energy Intensive Industries package announced in the 2014 Budget as soon as possible.