Britain’s manufacturers are responding to some of the developed world’s highest industrial electricity prices by delaying investment, cutting staff and shifting production abroad. A June 2026 survey from Make UK and the Trades Union Congress (TUC) points to mounting financial pressure across the sector, with one in four manufacturers having relocated some production overseas or considering doing so.
The survey’s findings underline a competitiveness gap that targeted relief may narrow but won’t erase. UK manufacturers pay an average of about 27 pence ($0.36) per kilowatt-hour, compared with 16p ($0.21) in other developed countries. Government data cited in the source put UK industrial electricity prices at more than 90% above the median across International Energy Agency member countries.
Cash pressure is already shaping decisions
For many firms, high energy costs are showing up in balance sheets and operating plans. A quarter of those surveyed have less than 12 months of cash reserves, and one in ten says it could face insolvency within a year. Meanwhile, 38% have frozen or postponed investment, and 21% have reduced staffing.
The exposure is especially acute in energy-intensive industries, including chemicals, steel, oil and gas refining, foundries, glass, cement, and pulp and paper. These businesses use large volumes of power and, in some cases, rely on natural gas both as fuel and as a production input. Moving part of that activity to markets with cheaper energy can ease cost pressure, but it also risks weakening Britain’s industrial base.
Gas prices and grid costs feed the gap
Britain’s reliance on natural gas for power generation leaves manufacturers exposed when fuel prices rise. Domestic North Sea reserves have declined, while the country relies heavily on liquefied natural gas. The UK also has limited operational gas storage, estimated in the source at roughly two to 10 days of supply, which can increase reliance on spot-market LNG during supply disruptions.
Gas-fired plants often supply power when demand is high. Under the UK’s marginal pricing system, the most expensive generator needed to meet demand sets the wholesale electricity price paid to all generators. When gas is that marginal source, its costs can lift the market price for electricity across the system.
Grid investment adds another layer to industrial bills. The shift toward renewable generation requires new transmission capacity and other network upgrades. National Grid’s planned £29 billion transmission rollout is one example of the scale of spending involved; much of the associated non-commodity cost is passed on to energy users.
The source estimates that government taxes and levies, including charges tied to grid upgrades, make up roughly half of an industrial business’s energy bill. Renewables Obligation, Contracts for Difference and Capacity Market charges are among the policy costs manufacturers pay. That means firms face pressure from both the underlying energy market and the costs of maintaining and changing the system.
Relief may cushion eligible firms
The government has introduced targeted support for energy-intensive businesses, with further relief expected through the British Industrial Competitiveness Scheme (BICS), planned for 2027. The scheme is intended to build on the British Industry Supercharger and could exempt 10,000 qualifying firms from selected renewable levies.
Eligible businesses in sectors such as aerospace, chemicals and automotive can apply to the Department for Business and Trade for energy-intensive industry certificates. The announced support is expected to reduce eligible companies’ electricity bills by up to 25%, or as much as £40 per megawatt-hour.
The Network Charging Compensation Scheme also offsets some transmission and distribution charges. Its discount increased from 60% to 90% in April 2026, although some steel and manufacturing companies may wait up to a year for payments, according to the source.
The cost gap remains the central risk
These measures could ease pressure for qualifying firms, but their reach and timing matter. Companies facing near-term cash constraints may not be able to wait for future support, and the schemes do not remove the broader difference between UK power costs and those faced by overseas competitors.
Manufacturing investment tends to follow energy that is both affordable and dependable. With firms already postponing capital spending, reducing headcount and moving production abroad, the next test is whether relief can arrive quickly enough to influence those decisions. Until UK industrial energy costs become more competitive, the country’s ability to retain and attract manufacturing capacity will remain under strain.