A growing number of British manufacturers are moving operations abroad or considering doing so, as high energy prices leave the sector struggling to compete internationally, according to new industry findings.
A survey by Make UK, the manufacturing trade body, found that one in four manufacturers has either already shifted part of their production overseas or is actively exploring the option. Around 10% have begun outsourcing production, while a further 16% are currently weighing relocation. Many of those affected are looking toward Asia, with China and South Korea among the most common destinations due to significantly lower industrial energy costs.
The findings have intensified concerns about the long-term health of UK manufacturing, which accounts for roughly 9% of the economy and supports around 130,000 businesses. Industry leaders warn that Britain is losing ground just as policymakers have pledged to rebuild domestic industrial capacity.
Stephen Phipson, chief executive of Make UK, said the cost burden facing manufacturers has become unsustainable. He argued that UK industrial electricity prices are among the highest globally, forcing firms to reconsider their operations. “We are seeing a flight from UK manufacturing because we are uncompetitive,” he said, calling for urgent government intervention to prevent further losses.
The report highlights a sharp reversal in industry sentiment. Only a year ago, many firms were focused on reshoring supply chains in response to global disruptions. That trend has now weakened, with companies increasingly unable to justify higher UK production costs compared with overseas alternatives.
Make UK estimates British manufacturers pay around 27p per kilowatt-hour for electricity, compared with about 16p across other advanced economies and roughly 6p in the United States. The gap, the group argues, is large enough to influence investment decisions before production even begins.
Energy costs in the UK are also shaped by multiple policy levies, including the climate change levy. While some energy-intensive firms receive partial relief through the British Industry Supercharger scheme, many manufacturers remain exposed to high charges.
The Government has proposed a wider British Industrial Competitiveness Scheme, due to launch next year, which would remove several levies for thousands of firms. However, industry leaders are urging ministers to bring the plan forward and expand its scope. Phipson warned that delays could accelerate deindustrialisation if businesses continue to leave.
The survey also points to worsening financial pressure across the sector. Nearly half of manufacturers reported rising energy bills following recent geopolitical tensions, while almost all respondents expect a significant impact on profitability. One in ten said they may face insolvency within a year.
A Government spokesperson said ministers recognise the challenges facing industry and are working with manufacturers to support growth. However, businesses say immediate action is needed as more firms choose to relocate in search of lower operating costs.
