High energy costs could drive investment overseas warning

It has projected a 50% hike in electricity costs by 2020 and warned that this would hit investment, margins and competitiveness, potentially applying a brake to economic growth. In fact, such is the impact that just 4% of manufacturers would be left unscathed, it added. The EEF survey has revealed that almost three quarters of manufacturers (73%) say electricity hikes of this magnitude would have a noticeable impact on their profit margins, while more than half (53%) say it would hit their competitiveness. Over a third (34%) would be forced to cut spend in other areas of their business. "More worryingly," said the EEF, "it could lead a quarter of manufacturers (25%) to consider investing in facilities overseas." It added: "The findings suggest that the increases would be adding to the pressure that manufacturers are already under – over a quarter (27%) are already spending more than 6% of turnover on energy. For 83% of companies, affordability is already a key concern. This rises to 87% among mid-sized firms." Gareth Stace (pictured), head of climate and environment policy at EEF, said: "This is a wake-up call that the tension between the pursuit of low carbon policies and Britain's ambitions for a better-balanced economy must be resolved. Failure to do so could hit investment, margins and competitiveness, putting the brakes on growth and leaving our economy stuck in the slow lane." He added: "It's time for a fresh approach. Low carbon is rapidly becoming synonymous with anti-competitive, which is why we are urging all parties vying for government to commit to review and reform current policies and mechanisms. "Above all, we are seeking a firm commitment to implement the Energy Intensive Industries package announced in the 2014 Budget as soon as possible. High energy costs are crippling for manufacturers of all sizes, but rapid implementation of this scheme would at least reduce the burden on those who are most exposed."