Britain could lose up to £250 billion in economic value over the next decade unless urgent action is taken to reduce persistently high energy costs, according to a new report by PwC that highlights mounting pressure on the country’s industrial base.
The analysis estimates the figure is equivalent to around 8 percent of current UK GDP, underscoring the scale of the challenge facing policymakers as energy-intensive industries struggle to remain competitive. PwC said elevated industrial electricity prices are acting as a structural brake on growth across manufacturing, advanced technology, and wider business investment.
The UK’s dependence on imported energy, combined with its marginal pricing system—where gas often sets the wholesale electricity price—has left it with the highest electricity costs in the G7. Additional policy costs, including renewable subsidies and grid expansion spending, are also more heavily embedded in British bills compared with other advanced economies.
The situation has worsened since Russia’s invasion of Ukraine pushed global gas prices higher, widening the gap between the UK and its international competitors. At its peak in 2024, UK electricity costs were 63 percent higher than those in comparable economies, according to the report.
Energy-intensive sectors have been particularly affected, with UK steel producers among those facing significant disadvantages compared with European rivals. PwC found that around half of surveyed investors identified energy pricing and infrastructure planning as key areas needing reform, describing energy security as a central pillar of future competitiveness.
Signs of strain are already visible in industry behaviour. A Make UK survey cited in the report found that one in four British manufacturers has either moved operations abroad or is actively considering doing so due to rising costs. Around 9 percent have already increased overseas outsourcing, while a further 16 percent are weighing similar steps.
PwC’s Simon Oates warned that the impact of high energy costs could extend beyond traditional manufacturing, pointing to emerging sectors such as data centres and advanced technology firms, which require large and growing volumes of electricity.
The report calls for a coordinated national energy strategy developed between government, industry and investors. It also recommends restructuring some policy costs and improving regulatory coordination to balance long-term energy security with short-term price competitiveness.
Vicky Parker of PwC described the current energy crisis as a critical turning point, arguing that failure to act now could represent a missed opportunity for long-term growth. Oates added that regulatory reform and more stable pricing mechanisms could help unlock investment and improve wage growth prospects.
The government defended its approach, saying it is investing in clean, domestic energy to reduce reliance on fossil fuels and lower bills over time. It also pointed to its British Industrial Competitiveness Scheme, which aims to cut electricity costs for thousands of manufacturers.
However, uncertainty remains over whether these measures will be sufficient to prevent further industrial relocation and long-term economic losses.
