Latest news with #deindustrialisation
Telegraph
3 days ago
- Business
- Telegraph
British factories suffer worst slump in Europe as energy costs bite
British factories have suffered the worst slump in Europe as energy costs weigh heavily on industry. S&P Global's closely-watched purchasing managers' index (PMI) for the manufacturing sector stood at 46.4 in May. Any score below 50 indicates a contraction in activity, with the latest figures marking an eight month downturn. Factories have been struggling to navigate the global trade war kicked off by Donald Trump. However, British manufacturers face additional problems, ranging from recent increases in tax to high energy prices. The PMI reading was the worst in Europe. Germany, which reported the lowest level of factory activity in the eurozone, had a manufacturing PMI of 48.3 by comparison. British bosses blamed higher energy prices for the poor performance. Companies pay the highest electricity prices of anywhere in the developed world, according to government figures. The cost of power for industrial businesses is now about 50pc more expensive than in Germany and France, and four times as expensive as in the US. Sir Keir Starmer has been urged to dramatically cut factory energy costs amid warnings that huge bills are pushing Britain towards 'de-industrialisation'. Removing net zero levies would instantly slash the electricity price paid by manufacturers by about one quarter, according to the lobby group's analysis. Fhaheen Khan, at Make UK said: 'Unfortunately, when tomorrow is a constant unknown, it becomes nigh on impossible to secure opportunities, which is leading to persistent declines in the sector. 'As a result of these material challenges, the manufacturing sector can only expect to continue its path of shrinking unless the Government's upcoming unveiling of the industrial strategy can reignite investment in growth.' Manufacturers' continued to cut jobs in May as labour costs climbed, following the increase in the minimum wage and employers' National Insurance contributions in April. Rob Dobson, the director at S&P Global Market Intelligence, said: 'May PMI data indicate that UK manufacturing faces major challenges, including turbulent market conditions, trade uncertainties, low client confidence and rising tax-related wage costs.' It came as Andy Haldane, the former chief economist at the Bank of England, said that Ms Reeves's time so far as Chancellor had been 'disappointing'. 'On too many measures ... it's felt like the fiscal cart has been put in front of the growth horse,' Mr Haldane told LBC. He warned that the Government was 'not even close to doing enough' on growth. 'To be honest it's felt penny-pinching, it's felt small, it's not been the sort of thing we need to get the animal spirits in the country going and therefore the country growing.'
The Sun
3 days ago
- Business
- The Sun
Farage blasts ‘net stupid zero' for destroying jobs and pledges to ‘save' UK gas ahead of showdown Scottish by-election
NIGEL Farage today blasted "net stupid zero" for obliterating the UK's oil industry, ahead of a showdown Scottish by-election on Thursday. The Reform chief drew battle lines against the SNP as he warned Scotland is "literally de-industrialising before our eyes". 3 3 3 In Aberdeen Mr Farage slammed the nats, led by First Minister John Swinney, for sacrificing an entire industry and thousands of jobs at the alter of green diktats. He claimed neighbouring Norway is "laughing" as it watches ministers import Scandinavian fossil fuels while dismantling local industry. Against the shouts of protesters, at a posh fish and chips restaurant the Reform leader said: "We can con ourselves as much as we like. "There will be more coal burned this year than ever before in the history of human kind. The same applies to oil and gas. 'Even the most adren proponent of net zero has to accept the world will still be using oil and gas up until 2050 and beyond. 'And yet we've decided to sacrifice this industry as a consensus around Net Zero has emerged.' Mr Farage added that the fight to save oil and gas is "almost the next Brexit". He said: 'Believe me, the scales are falling from the eyes of the public when it comes to Net Zero. "They realise we are putting upon ourselves a massive cost, let alone the opportunity cost of what we're missing... 'When we closed down refineries.. and steelworks... all we're doing is exporting the emissions of CO2 with the goods then being shipped back to us. 'The public are waking up to this." It comes ahead of a Hoylrood by-election in Hamilton, Larkhall and Stonehouse on Thursday, described by Reform Deputy Leader Richard Tice as an "absolute cat fight" with the SNP and Labour. Mr Farage acknowledged it would be an "earthquake" level shock if Reform's candidate wins the seat. But activists have reported being surprised at levels of support on the doorstep. Mr Farage insisted the Reform "can replicate success in Scotland". He said: 'Scotland has not had much resource but has some very energetic organisers, some great new talent, and real world experience. I don't see any reason we can't do the exact same thing. 'I accept the SNP has a very solid baseline vote. The Conservative party in Scotland has withered... and the conditions for the Labour vote in many parts of Scotland are not dissimilar ro County Durham. 'I'm very optimistic we can make a big run at the Scottish parliament next year.'
Telegraph
4 days ago
- Business
- Telegraph
Starmer under pressure to save factories crushed by energy prices
Sir Keir Starmer has been urged to dramatically cut factory energy costs amid warnings huge bills are pushing Britain towards 'de-industrialisation'. Make UK, which represents Britain's biggest manufacturers, said domestic companies faced some of the highest electricity prices in Europe – and that half now viewed this as their biggest future challenge. It called on the Prime Minister to scrap a series of 'regressive' net zero levies on bills, arguing this is 'the most direct and impactful way to improve industrial competitiveness'. Make UK is also calling for the Government to provide manufacturers with wind-farm style electricity deals, known as contracts for difference (CfDs), which would fix their electricity price at a set level. The announcement comes as ministers are preparing to unveil their industrial strategy for Britain, with Sir Keir and Rachel Reeves under pressure to help firms with their energy bills. Stephen Phipson, chief executive of Make UK, said: 'If we do not address the issue of high industrial energy costs in the UK as a priority, we risk the security of our country. 'We will fail to attract investment in the manufacturing sector and will rapidly enter a phase of renewed de-industrialisation.' The proposal to remove net zero levies would not be cheap, however. It would cost the Treasury £3.8bn, while giving manufacturers CfDs would cost a further £1.1bn. Without other immediate cuts to government expenditure, this would probably have to be shifted on to general taxation or the bills of domestic consumers. Make UK suggested the schemes could be 'phased in' gradually to reduce the financial impact and argued that both measures would be revenue-neutral in the long-run because they would stimulate industrial growth. Scrapping net zero levies would slash prices Removing net zero levies would instantly slash the electricity price paid by manufacturers by about one quarter, according to the lobby group's analysis. The report said this should include scrapping the so-called renewables obligation, feed-in tariffs levy, capacity market levy, climate change levy and CfD costs. They currently account for about 6.4 pence per kilowatt hour of the 27.1 pence per kilowatt hours paid by industrial firms for electricity, Make UK said. A single levy, the renewables obligation, accounts for £2bn of the £3.8bn in levies paid per year by manufacturers alone. The legacy scheme was set up to support early wind and solar farms with 20-year subsidy deals, topping up the electricity price they are paid. It closed to new entrants in 2017, having been replaced with newer CfDs. CfDs guarantee renewable generators a price at which they can sell electricity, with the Government paying the difference if market prices are lower than this and generators repaying the state when market prices go higher. Manufacturers want a similar arrangement, but in reverse. This would mean they are guaranteed a fixed price for buying, rather than selling, electricity – with the Government once again covering any difference. Ministers have previously suggested they intend to provide further support on energy costs for manufacturers in the industrial strategy, but this has previously only been extended to the most energy-intensive firms such as steel makers, glass blowers and ceramic factories. A policy known as the 'British industrial supercharger', which exempts these companies from many policy costs as well as network charges, benefits around 400 businesses. But Make UK warned that the supercharger 'does not eliminate the need' for greater action on energy bills, as it only benefitted a relatively small number of firms. 'Not only is most of the manufacturing sector still exposed to these high costs, [but] as the costs of the supercharger are met by other electricity bill payers, ineligible manufacturers are facing an even greater share of costs, to subsidise eligible energy-intensive industries, further exacerbating the problem,' its report added. On Friday, a spokesman for the Government said: 'Through our clean power mission, we will get off the rollercoaster of fossil fuel markets – protecting business and household finances with clean, home-grown energy that we control. 'We are already bringing energy costs for UK industries closer in line with other major economies through the British Industry Supercharger – saving businesses £5bn over the next ten years.' Inflation to rise Separately on Monday, the Confederation of British Industry (CBI) warned households must brace for more inflation as businesses face rising costs. Private sector output is set to plunge at the fastest pace since Liz Truss's mini-budget in 2022, according to its survey of businesses across the economy. Alpesh Paleja, economist at the CBI, said the £25bn raid on employers' National Insurance Contributions and recent minimum wage rise were the primary concerns among businesses. Rising prices raise the threat of sustained high interest rates as the Bank of England balances the risk of low growth against stubborn inflation. Mr Paleja said: 'There is a very strong concern among the Monetary Policy Committee, at least a majority, of inflation persistence, particularly domestic price pressures being quite sticky. 'You've got price pressures in the services sector firming further but output remaining weak, so that trade off is quite prominent for the MPC. Rates will probably be cut at still quite a gradual pace going forward.'
