UK manufacturers are grappling with Europe’s highest industrial energy prices, a burden that threatens competitiveness as businesses face rising costs and increased import pressure from cheaper, less sustainable producers.
Encirc, which produces over a third of Britain’s glass bottles, exemplifies the strain. At its northwest England plant, molten glass is formed into bottles, but company executives warn that energy costs are significantly higher than those of European competitors. Oliver Harry, head of corporate affairs at Encirc, noted that the firm is already seeing a rise in imports from countries like China and Turkey as customers seek lower-priced alternatives.
Official data confirms the challenge, showing Britain’s industrial electricity prices were the steepest in Europe in 2024. This is largely due to the UK’s continued reliance on natural gas for over a quarter of its power, a situation exacerbated by the price surge following Russia’s 2022 invasion of Ukraine. Unlike countries such as France, where cheaper nuclear power frequently sets the market price, the UK’s liberalised electricity market often relies on the last, typically gas-fired, power station to meet demand, keeping prices elevated.
To alleviate pressure, the UK government announced it will increase discounts on electricity network charges to 90% from April, a move expected to save around 500 major energy users approximately £420 million annually. A government spokesperson stated that lowering bills is central to its strategy. However, industries argue this support is insufficient. Gareth Stace of UK Steel highlighted that industrial power prices remain nearly 40% higher than in France and Germany, calling for stronger protective measures seen in other nations.
The tension underscores a complex transition. While the UK has successfully decarbonised its grid by phasing out coal, the interim dependency on expensive gas creates a critical financial challenge for heavy industry. Professor Gregor Singer of the London School of Economics described the timing of the gas price shock as “unfortunate,” occurring just as coal is retired but before renewables are fully scaled. Experts suggest that as renewable capacity grows, prices should moderate in the medium to long term.
For now, companies like Encirc are pushing ahead with decarbonisation targets—aiming for an 80% reduction in carbon emissions per bottle by 2030—but stress that viability depends on affordable energy. The episode highlights the precarious balance between environmental goals and industrial competitiveness, a challenge that will shape the future of Britain’s manufacturing base.
