Britain’s ambitions for stronger economic growth and industrial electrification will remain out of reach unless business energy costs are brought down, according to a new report from the Confederation of British Industry (CBI) and Energy UK.1
The document argues that persistently high electricity prices have evolved from an energy sector issue into a wider economic problem, undermining investment, productivity and international competitiveness across large parts of the economy.2
With a new Prime Minister preparing to set out an economic agenda for the coming parliament, the organisations warn that reducing business energy costs should become an immediate priority if the UK is to attract investment and accelerate industrial decarbonisation.3
According to the report, UK electricity prices stand around 45% above the G7 median, while existing support schemes for energy-intensive industries exclude around 2.7 million businesses accounting for 90% of non-domestic electricity consumption.4 The report also cites evidence suggesting that four in ten companies have reduced investment as a result of high energy costs.5
The findings are likely to add to growing concern that the UK’s approach to funding the energy transition risks slowing the very electrification needed to achieve net zero targets. Sectors including manufacturing, transport, heating, data centres and hydrogen production are all expected to increase electricity consumption significantly in coming decades.6
Produced jointly by the CBI and Energy UK, with analysis from Cornwall Insight and the National Institute of Economic and Social Research (NIESR), the report proposes a package of reforms designed to lower electricity prices and improve competitiveness.7
Central recommendations include removing Renewables Obligation and Feed-in Tariff costs from business electricity bills, ending Climate Change Levy charges on non-domestic electricity consumption, reducing balancing costs through market reform, improving energy efficiency standards and introducing new support for business electrification.8
The organisations estimate that implementing the proposals in full could unlock an additional £130 billion in economic activity between 2027 and 2050.9
Louise Hellem, CBI chief economist, said:
“Years of loading policy costs onto electricity bills have left UK businesses facing some of the highest electricity costs among the world’s biggest economies. At a time when we really need firms to invest, electrify and compete on the world stage, these costs make all three goals more difficult, representing a massive drag on economic growth.
“With a new Prime Minister coming into office, it’s clear that reducing business energy costs must be a day-one priority. If we want to tackle the cost of living and invest in public services, we need stronger economic growth – and that can’t happen while firms are navigating sky-high energy bills.
“Reliable, affordable energy is essential for all businesses. That starts by removing policy costs from bills, reforming our energy system and shaping the market to make electrification more practical and affordable.”10
Dhara Vyas, chief executive of Energy UK, said:
“The UK cannot afford to let high energy costs continue to damage business investment, reduce our international competitiveness, and worsen the cost-of-living crisis.
“Energy is an essential service that underpins both daily life and economic growth. Yet years of making policy decisions with little regard to the impact on business energy users has left the UK with some of the highest industrial energy costs in the developed world. If we are serious about growth and competitiveness, it is time to address these challenges and put in place a more effective long-term approach.
“Every government talks about growth, investment and rebuilding Britain’s industrial strength but we need to see immediate action. Taking policy costs from bills, making sure our energy system works better for all businesses, and making it easier for them to electrify can move us away from stagnation towards a thriving economy that stands shoulder to shoulder with our international counterparts.
“With £130 billion up for grabs from our recommendations, the new Prime Minister has a ready-made blueprint to work with industry and make the UK a better place to live and work.”11
Dan Morris, chief executive of Cornwall Insight, said uncertainty over future energy prices had become almost as significant a challenge for businesses as the prices themselves.
“Rising electricity bills are putting real pressure on businesses, shaping decisions on investment and how quickly they can electrify. That pressure is heightened by how difficult energy costs have become to plan for, with variability and uncertainty now almost as big a challenge as the price itself. And while wholesale markets get most of the attention, it’s rises in policy costs and network charges that are locking in price pressures through this decade and undermining businesses’ ability to predict them.”12
He added that the impact varied considerably between sectors, with manufacturers, data centres and commercial sites facing very different cost pressures depending on how and where they operated.13
“The decisions made now about sharing the costs of the energy transition will help determine whether businesses can invest, compete and electrify at the pace the country needs to grow.”14
Endnotes
[1] CBI and Energy UK, Higher growth to remain out of reach without cheaper energy – CBI and Energy UK tell new Prime Minister, July 2026.
[2] Ibid.
[3] Ibid.
[4] Ibid.
[5] Ibid.
[6] UK Government net zero and electrification policy documents; Climate Change Committee analysis of industrial electrification and electricity demand growth.
[7] CBI and Energy UK, op. cit.
[8] Ibid.
[9] Ibid.
[10] Louise Hellem, Chief Economist, CBI, quoted in CBI and Energy UK, op. cit.
[11] Dhara Vyas, Chief Executive, Energy UK, quoted in CBI and Energy UK, op. cit.
[12] Dan Morris, Chief Executive, Cornwall Insight, quoted in CBI and Energy UK, op. cit.
[13] Ibid.
[14] Ibid.
