Jobs and Energy: The effect of high energy costs on the UK jobs market

Jobs and Energy: the effect of high energy costs on the UK jobs market is the first in a new series of in-depth research publications from the Jobs Foundation examining the fundamental drivers of job creation and loss across the UK economy. Over the coming years, we will continue this work with studies on topics such as the UK’s regulatory and fiscal environment, skills and training systems, and emerging technologies such as artificial intelligence.

Published ahead of the Government’s long-anticipated industrial strategy, Jobs and Energy presents a comprehensive picture of the damage high energy prices are inflicting on Britain’s industrial base. It maps the areas in the UK most reliant on energy-intensive industries and highlights where job losses are likely to have the most devastating social effects, alongside a comprehensive analysis of the sectors most impacted by high energy costs.

In his Foreword, our President, Matthew Elliott, warns:

“We must avoid repeating the mistakes of the 1980s, when the unmanaged decline of coal devastated entire communities. Today’s energy-intensive industries – steel, chemicals, glass, ceramics – are facing a similar fate. The government must act to lower energy prices in order to protect jobs and secure Britain’s industrial future”.

The author of the report, Rian Whitton, adds:

“For 20 years, tangible British economic growth has stagnated. Manufacturing turnover in 2023 was lower than in 2006. We risk sleepwalking into seeing communities across the country decimated, with workers losing their livelihoods and identities through no fault of their own”.

Some of the key conclusions of the report include:

• UK industrial electricity prices are among the highest in the developed world, with British firms paying on average 46% more than companies in comparator countries. For large industrial users, this gap rises to over 100%. The result is a severe cost disadvantage in global markets.
• Energy-intensive industries are shrinking or closing altogether. Between 2021 and 2024, chemical output fell by 40%, and British steel production has collapsed from 12 million tonnes in 2013 to just 4 million in 2024. Aluminium, paper, glass and fertiliser plants have also closed or scaled back.
• High energy prices are a direct barrier to growth in emerging sectors. From data centres and electric vehicles to AI infrastructure and advanced manufacturing, energy costs are preventing the UK from attracting investment in the jobs of the future. Without competitive pricing, Britain risks falling permanently behind global rivals.
• Public policy has worsened the problem. Rather than shielding the UK economy from energy price volatility, current policy has added to it. A complex web of levies and market mechanisms — including the Climate Change Levy, Contracts for Difference, and the Capacity Market — has driven up prices for producers and consumers alike.
• The impact is not evenly distributed. While high energy costs affect the economy as a whole, they hit energy-intensive firms hardest — particularly those in industries like steel, cement, ceramics, chemicals and glass. These sectors often support local supply chains and provide good, long-term employment in areas of economic fragility.

Jobs and Energy demonstrates how energy pricing has become a defining issue for the UK’s competitiveness, regional equity, and economic resilience. As the country navigates the transition to net zero, report highlights how safeguarding high-skilled employment must be a central goal of industrial policy.