Clock ticking on energy impact for manufacturers in 2023

18 January, 2023

The 2023 Make UK/PwC Senior Executive survey examines the views of over two hundred senior executives across manufacturing on the outlook for the year ahead. It shows the scale of uncertainty and increased costs that companies continue to face across the board, not just on energy, with ongoing supply chain disruption, access to labour and increased transport costs creating a potent mix of challenges for companies.

The survey also evidences the domestic political chaos of the last year has impacted the competitiveness of the UK as a place to manufacture and, made it less attractive for foreign investment.

According to the survey, almost three quarters of companies (70%) expect their energy costs to increase this year, with two thirds saying they still expect to take actions such as reducing production or cutting jobs despite the Government energy support package.

In addition, 60% of companies are increasingly concerned about blackouts affecting their business, almost two thirds of companies (64.3%) say increased energy costs are the biggest risk to their company, while more than two thirds (68.9%) say uncertainty around energy costs is the biggest risk to confidence.

Make UK warns that a less generous relief package may not shield companies from the worst of these increases, while excluding some companies which have a high energy exposure but don’t currently fall under the traditional ‘energy intensive’ definition. Make UK added that extending the current scheme is essential to maintain the competitiveness of the UK compared to other countries such as Germany where there are more extensive and generous energy support schemes in place. Almost half of companies (45%) said this was the most important action the Government could take.

Commenting, Stephen Phipson, chief executive at Make UK, said:

“The year ahead is going to be very challenging for manufacturers with a potent mix of factors testing their resolve. Ongoing supply chain disruption, access to labour and high transport costs which show no sign of abating can be added to a growing sense of economic and political uncertainty in their main markets.

“The biggest risk, however, remains the eye watering increases in energy costs which has left the clock ticking for many companies. While an extension of the energy relief scheme will be welcome, to date it has just been a sticking plaster and making it less generous will make the situation worse for many companies. In fact, there is a very strong and urgent case for matching the more generous schemes our competitors have in place.