The latest business survey from the Chemical Industries Association (CIA) exposes a sector facing unprecedented pressure, with soaring energy, raw material and trade‑related costs pushing many UK chemical businesses to the brink. Already contending with long‑standing competitive disadvantages at home, the industry is now being hit by global instability and sharply rising input prices, deepening concerns over further site closures, lost investment and the long‑term viability of one of Britain’s most strategically important manufacturing sectors.

The UK chemical industry, a cornerstone of the nation’s manufacturing base and a critical enabler of sectors ranging from pharmaceuticals to defence, continues to face intense cost pressures as many businesses fight to survive.  Already struggling to compete opposite crippling energy and carbon reduction costs and broader post-Brexit regulatory uncertainty in a low-demand world, the Gulf conflict has added to the list of challenges in the form of even higher energy prices, an increase in raw material costs and a widespread pause on trade and investment decisions.  

The latest quarterly business survey from the Chemical Industries Association shows 88% of reporting rising raw material prices, alongside 85% facing higher import costs and 80% higher export costs, with energy costs also increasing for a significant majority (68%).

Chief Executive of the Association Steve Elliott said:

“As a country we may be at the mercy of many global affairs, but we can and should manage our own domestic policy framework. For more than a decade, UK government policy has ensured that UK chemical businesses have been paying far more for their energy than almost every other competitor nation. Today our gas continues to be four times more expensive than in America and we have the highest industrial electricity prices of anywhere in Europe. These are not global headwinds, these are UK policy decisions taken by successive governments. Almost thirty site closures and the thousands of job losses in five years ought to be evidence enough of the need to change direction”. He added: “thankfully there is still some brilliant, first-class, world-beating innovation and production happening right here in the UK – underpinning our critical national infrastructure; our growth sectors and our ability to deliver a net zero future – but it is fast disappearing, and, as we outlined in our early March letter to the Prime Minister, action is needed urgently to reverse this decline.”

Léa Charbonnier, Economist at CIA, said:

“Our survey also found that for the next quarter cost pressures would increase with facing even higher energy costs, 78% higher raw material prices, 78% higher importing costs, and 76% higher exporting costs. These numbers will not sustain current investment in the UK, let alone attract any for the future. The survey showed expectations for the rest of 2026 were equally pessimistic. Asked to look a year out, anticipated increases across a range of costs were predicted: raw material prices was the view of 83% of companies, importing (82%), exporting (80%), and energy (79%).”

Steve Elliott concluded:

“With chemical industry output falling by 60% in 2025 (more than any other major manufacturing sector) our messaging to Government could not be more straightforward.  We need urgent, coordinated action, through the framework of the Government’s Industrial Strategy, delivering:

  • internationally competitive energy prices
  • a carbon reduction timeline and targeted support to incentivise decarbonisation and the route to net zero 2050
  • a broader regulatory framework that provides long term certainty and supports growth and investment”

ENDS

 

NOTES TO EDITOR

For more information please contact Simon 07951 389197 or Taff 07538 037317

  • Businesses who make chemical products and solutions are integral to something like 96% of all manufactured goods. Whether it is ingredients for food and medicines; paints and coatings for cars and planes or materials for mobile phones and electric vehicle batteries or defence equipment, the chemical industry is truly the “industry of industries”
  • The Government’s 2025 industrial strategy said “at the core of Advanced Manufacturing underpinning all domestic manufacturing.”
  • Chemical businesses are located throughout the UK, with many of them clustered together in the North East of England, North West of England and Central Scotland. These factories and laboratories, operated by a highly trained and skilled workforce, make a significant contribution towards the UK’s productivity performance.
  • Roughly 135 thousand people are employed in the sector and nearly half a million have roles that are dependent on the sector. Chemical workers typically earn around 25% more than other manufacturing industries and almost 40% more than the average worker.
  • From Runcorn to the Humber Bank; from Teesside to Grangemouth, chemical businesses and their employees right across the country are essential to the Government’s levelling-up agenda.
  • We are the country’s second biggest manufacturing exporters, sending goods to the value of more than £70 billion to other countries. The EU represents our biggest market, but we continue to work closely with Government to inform and secure UK trade deals with other key chemical markets such as India and the USA. 

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