The UK risks losing its status as a leading manufacturing nation unless energy costs are brought under control, business leaders have warned.

A new report from the Confederation of British Industry (CBI) and Energy UK found that around 40% of firms have reduced investment, as electricity prices remain significantly higher than before Russia’s invasion of Ukraine.

Business electricity costs are still around 70% above pre-war levels, while gas prices are roughly 60% higher.

The survey underpinning the report showed almost 90% of companies have seen energy bills rise over the past five years.

Without a reduction in costs, the groups said, the risk of job losses, production cuts, plant closures and offshoring will increase.

The report delivers a stark message to ministers, arguing that failure to reform the UK’s ageing gas and electricity networks and outdated market regulations is undermining competitiveness across sectors from chemicals to hospitality.

UK industrial electricity prices are now almost two-thirds above the median of International Energy Agency countries and the highest in the G7. Among medium-sized firms, electricity prices are around double the EU median.

In 2025, the UK recorded a £248.3bn goods trade deficit, £30.5bn worse than the previous year, according to the Office for National Statistics.

Although services posted a £192bn surplus, up £16.4bn, it was not enough to offset the widening goods gap.

Louise Hellem, the CBI’s chief economist, described 2026 as a pivotal year for industrial strategy, warning that energy costs are inflicting severe financial pain, particularly in energy-intensive sectors such as chemicals.

Energy UK’s chief executive Dhara Vyas said existing support for heavy industrial users, including plans to cut electricity prices by up to £40/MWh for 7,000 firms, amounted to a “sticking plaster”.

She said the new joint task force would examine how market reform and network efficiency improvements could lower prices for all businesses, arguing that affordable energy is fundamental to the UK’s long-term growth and net zero ambitions.