Energy costs sapping manufacturers

British manufacturers are facing an increasing threat to their competitiveness from rapidly escalating energy costs according to a survey published this week by EEF the manufacturers’ organisation.

The survey of 371 companies showed 93% had experienced an increase in energy prices over the last twelve months with average weighted increases in gas and electricity of 47% and 34% respectively. These rates are more than double the level of increases reported in 2004.

In addition, three quarters of companies saw the cost of gas increase in excess of 30%, whilst 40% of electricity consumers saw increases greater than 30%. The impact of higher prices has been particularly acute for energy intensive companies, which have experienced even higher increases in unit energy costs. Furthermore, not all large consumers are large companies.

As a result, large industrial users in the UK currently face the highest gas prices and, amongst the highest electricity prices in Europe. This is despite the fact the UK has a fully liberalised gas market and remains the largest producer of gas in the EU. Looking forward, companies see no respite with 80% expecting the cost of energy to increase further in the next twelve months.