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UK energy costs push manufacturers to consider moving production abroad
High energy costs are increasingly shaping manufacturing investment decisions in Britain, according to a new industry survey. Some companies have already shifted production overseas, while others are weighing similar moves as electricity prices remain a concern for manufacturers competing in global markets.
UK manufacturers caution that high electricity prices still hamper international competitiveness, with an increasing number of companies already relocating production – wholly or partially – to overseas locations or considering doing so.
The latest Make UK and Infor Executive Survey 2026 reveals that 10 percent of manufacturers have already shifted some operations overseas and a further 16 percent of companies are exploring similar options.
The figures further exacerbate worries that energy costs have become the dominant factor in manufacturing investment and production.
Cost pressures changing the face of manufacturing
More than half of all manufacturers did not benefit from schemes aimed at reducing electricity costs for industrial producers and close to half reported a further increase in energy expenses in recent months given the continued volatility in global energy markets.
Companies were considering China and South Korea as preferred locations for some industrial operations, where it costs less to operate. Industrialists say the difference between electricity costs in the UK compared with rivals in certain parts of Europe, Asia and North America, continue to impact business decisions.
The survey underlines for international investors and global supply chain companies where it is worth developing, expanding or building factories.
Calls for greater support for sector
Manufacturing makes up 2.6 million jobs and generates an annual output of about 224 billion in the UK economy according to Make UK. High energy costs have had the greatest effect on energy-intensive industries such as steel, chemicals, glass, ceramics and metals.
Make UK has calculated that expanding the support for electricity prices to more of manufacturing would cost the nation an estimated 3 billion per annum, but it would serve to protect around 2.5 million manufacturing-related jobs.
The Chief Executive of Make UK, Stephen Phipson, insisted that manufacturers must have the opportunity to secure internationally competitive energy prices if production is to remain and investment is to flow in. The Trades Union Congress (TUC) have likewise urged for wider support as there is a clear risk to industrial jobs if costs continue to rise.
The results comes at a time when many governments throughout Europe try to strike a balance between industrial competitiveness, energy security and sustainable growth, as manufacturers increasingly question where investment can best deliver the lowest operational costs.
Source: Reuters
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