Miliband net zero energy bills could force factory closures

By the Editorial Team · Monday, July 6, 2026

Rising energy costs, driven by the UK’s net zero policies, are threatening manufacturing firms with closures and significant job losses, according to a report by Make UK. If these costs remain high, the sector risks losing a substantial portion of its contribution to the economy, potentially erasing £85 billion in economic activity and permanently damaging industrial capacity.

Soaring energy costs linked to the United Kingdom’s push for net zero emissions are placing considerable strain on manufacturers, with industry leaders warning of potential factory closures and widespread job losses. A recent report from Make UK, which represents around 20,000 manufacturing firms, highlights the damaging impact of rising energy bills on the sector’s profitability and the broader economy.

Stephen Phipson, chief executive of Make UK, emphasized that high energy prices constitute one of the largest risks to the future viability of UK manufacturing. "Companies want to invest, innovate and decarbonise," he said, "but they cannot do so while electricity prices remain internationally uncompetitive." He added that, without prompt measures to address these costs, the country could suffer a permanent loss of industrial capacity that would be difficult to restore. Notably, Phipson clarified that manufacturers are not seeking subsidies but rather a more sustainable cost structure.

The study found that 90 percent of manufacturers have encountered significant increases in energy bills since 2022, with 13 percent fearing that further increases could drive them out of business. Given that manufacturing contributes approximately £650 billion to the UK economy annually, the potential exit of those firms would represent a loss of about £85 billion in economic activity. This would come amid a long-term decline in manufacturing’s share of GDP, which has fallen from 17 percent in 1990 to just 8 percent today.

Make UK attributes a key part of the high energy costs to government policies that shift the financial burden of renewable energy subsidies onto consumer and business energy bills. These policy costs are designed to guarantee minimum prices for electricity generated by wind, solar, and nuclear plants, but critics argue they have made UK electricity prices uncompetitive on the global stage.

In response, a government spokesperson said officials are maintaining close dialogue with businesses and unions to understand challenges and provide support where possible. "We are ensuring we’re doing what we can to help them through tough times," the spokesperson said, without detailing specific plans to address the concerns raised.

As the UK continues its transition toward net zero emissions, balancing ambitious climate goals with the economic health of vital manufacturing industries remains a pressing challenge for policymakers.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.