Britain risks becoming the first advanced economy to have an industrial strategy without a significant industrial base to support as an increasing number of manufacturers are moving production overseas or, are actively considering doing so, in response to the soaring costs of the UK business environment.

Despite a promise in last year’s Industrial Strategy of “bold action” to bring down energy costs, nothing has yet been delivered to support businesses. Make UK is today warning ministers that manufacturers’ patience has run out and that member companies are taking action to move production elsewhere – a warning backed by the Trades Union Congress.

Commenting on the findings, Stephen Phipson, CEO of Make UK, said: “The time for talking is over. The time for action is now. Britain faces deindustrialisation unless manufacturers get relief from high energy prices.

“Electricity and gas in the UK are far too expensive and it’s costing our country steeply. We cannot afford to be delayed by political upheaval, or by further consultations. For the sake of thousands of jobs across Britain, the Government needs to step in and act now to expand the British Industrial Competitiveness Scheme to all of the manufacturing industry and speed up delivery.”

The warning comes on the back of a major survey released today by Make UK which raises the spectre of the deindustrialisation of the UK accelerating, In particular due to the UK’s eye watering energy prices which were already the highest in the G7 but, have increased further since the start of the conflict in the Middle East.

The continued increases in energy costs come on top of a raft of increased employment costs from the increase in National Insurance Contributions and raising of the threshold at which they are paid.

The pressures are increasing despite the outlook for orders and output holding up, in line with the latest PMI, as profit margins are being squeezed due to costs continuing to exceed companies’ ability to raise prices.

This is leading companies to burn through cashflow with more than a quarter saying they have less than twelve months of cash left and one in ten saying they are likely to become insolvent in the next year.

In response, Make UK is continuing to call for the proposed business energy support scheme to be brought forward from 2027 and, expanded to 130,000 companies across the whole manufacturing sector, not just the 10,000 companies it is currently aimed at helping.

Paul Nowak, General Secretary of the Trades Union Congress, today joined Make UK’s call for action: "BICS is an important step towards tackling the punishing cost of energy for manufacturers.

"But with Donald Trump's reckless war in Iran continuing to hammer energy bills, the scheme needs to be expanded further to protect jobs and keep factories and plants running.

“We also need a long-term plan to support workers in manufacturing industries and bring bills down for good through energy efficiency and decarbonisation. That’s how we can reduce the impact of shocks and secure the future of UK industry.”

According to Make UK’s survey almost 1 in 10 (9%) of companies have already moved production overseas due to higher business costs, with a further 16% considering doing so. Almost half (46%) have seen a further increase in their energy bills since the start of the conflict in the Middle East, with 6 in 10 passing this rise on to customers.

However, despite increasing their prices, margins are continuing to be squeezed with almost all companies (98%) saying they will see a very significant or somewhat significant impact on their profitability. In response, almost 4 in 10 (38%) of companies have delayed investment and more than a fifth (21%) have reduced their headcount.

While these forward-looking indicators for the next year are very concerning, the survey shows despite these current conditions are holding up. Output remained positive at +26% (up from +21%) while orders also remained positive though dipping slightly to +18% from +21%). Investment intentions dropped significantly, however, from +20% to +15%.

In response to the weaker outlook for the next year, Make UK has downgraded its forecasts for manufacturing to +0.4% for this year (down from 0.9%) and just +0.1% for 2027.