THE UK economy could be left ‘stuck in the slow lane’ unless action is taken to address escalating energy costs, new research suggests.
An EEF survey of 139 manufacturers found that a projected 47 per cent hike in electricity prices between now and 2020 could drive investment overseas potentially halting economic growth. A quarter of those surveyed said they would consider investing in facilities abroad if the EEF’s predicted price hike in electricity prices by 2020 goes ahead.
More than two thirds (73 per cent) claimed the anticipated rise in electricity costs would have a noticeable impact on profit margins, 34 per cent insisted they would be forced to cut spend in other areas of their business, while more than half (53 per cent) claimed the hike would hit their competitiveness.
The EEF research, based on interviews with MDs, CEOs, directors, sustainability professionals, and general managers amongst others, also indicated that increases would add to the pressure that manufacturers are currently under – over a quarter (27 per cent) are already spending more than six per cent of turnover on energy.
In addition, concerns were raised over the adequacy of Government energy efficiency schemes – fewer than one in five firms (19 per cent) believed the key UK projects provided the right incentive to improve energy efficiency and almost four in ten (38 per cent) consider the schemes to be overly complex.
Only 32 per cent thought innovation was driven by ambitious climate change targets, while 41 per cent warned they risked undermining competitiveness.
“It’s time for a fresh approach,” Gareth Stace, the EEF’s head of climate and environment policy said. “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.”
Stace called on the government to implement measures announced in the budget to compensate energy-intensive industries for the increased costs associated with policies to reduce carbon emissions.
“High energy costs are crippling for all manufacturers of all sizes, but rapid implementation of this scheme would at least reduce the burden on those who are most exposed,” he said.