The government’s assurance that its modern industrial strategy will support the UK manufacturing sector seems a hollow promise that is not being backed up by any decisive action as energy prices continue to rise.
The impact of high energy prices
The manufacturing body Make UK has issued a damning report identifying that Britain’s industrial energy prices are four times higher than in America and 46% above the global average, meaning that the country’s industrial sector is at risk of collapse.
The short-term cost
Many manufacturing companies have already taken immediate action to balance the books when hit with unsustainable energy prices, including laying off staff, increasing prices and delaying investments, but even with these actions, 98% of UK manufacturing businesses reveal that their profit margins are down, with 10% reporting that insolvency is likely or very likely within the next year.
Tackling the issue
While domestic sourcing of common parts such as industrial valves is beneficial due to the reduced carbon footprint and simplified supply chain, small British companies warn that it may be necessary to move production abroad to benefit from cheaper wages and energy prices in order to continue to meet demand.
Make UK has identified that up to 50% of industrial bills impacting businesses such as https://orseal.com/ consist of government taxes and levies and suggests that a quick win to save British industry is for the Treasury to cover these costs.
Though the government’s subsidy scheme already aims to reduce industrial energy bills by up to 25%, it will still be too late for many firms.
