Manufacturers warn ‘energy policy must support balanced economy’

A rapid increase in energy costs could seriously undermine Britain's ambitions for a better-balanced economy according to a report published today by the manufacturers' organisation EEF.

Read the full report here – Agenda for Government to 2020

The research predicts a 50% rise in electricity costs by 2020 which would hit investment, margins and competitiveness, potentially halting economic growth and driving a quarter (25%) of manufacturers to invest in facilities outside the UK.

EEF head of climate and environment policy Gareth Stace 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.”

According to the report almost three quarters (73%) of manufacturers said that such a considerable rise in electricity costs would have a noticeable impact on their profit margins, more than half (53%) said it would hit their competitiveness and more than one in three (34%) would be forced to cut spending in other areas of their businesses.

As part of its agenda, EEF is calling for the implementation of the Energy Intensive Industries (EII) compensation package as announced at the 2014 Budget, a fresh approach to industrial energy efficiency and decarbonisation, and a review and reform of the costs to energy consumers of decarbonising the power grid.

Stace added: “High energy costs are crippling for manufacturers of all sizes, but rapid implementation of this scheme would at least reduce the burden on those who are most exposed.”

Read the full report here – Agenda for Government to 2020

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