By Daniel Hunter

Government plans for a more balanced UK economy could be in jeopardy as a result of rising energy costs, according to EEF, the manufacturers' organisation.

A report by the EEF estimates that energy prices will rise by 2020 - an increase that will effect 96% of manufacturers.

Seventy-three percent of manufacturers said such rises in prices would have a noticeable impact on their profit margins and more than half (53%) said it would impact on their competitiveness.

More than a third (34%) said it would force them to cut costs in other areas of the business and 'more worryingly', the EEF said, is the 25% who said they would consider investing in overseas facilities.

The report also raises questions over the government fuel efficiency schemes. Nineteen percent of manufacturers said government schemes fail to provide the right incentive for better efficiency. And 38% believe the schemes are too complicated.

Gareth Stace, Head of Climate & 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.

“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.”

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