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New plan aims to cut electricity costs for over 7,000 firms and stimulate long-term economic growth
The UK government will unveil a sweeping new industrial strategy on Monday aimed at reducing electricity bills for thousands of businesses, responding to growing concerns from industry leaders over high energy costs that have hampered competitiveness and stifled economic growth.
Under the new plan, which outlines Britain’s industrial policy for the decade spanning 2025 to 2035, the government proposes to reduce electricity costs for energy-intensive manufacturers by up to 25% starting in 2027. The initiative is expected to benefit more than 7,000 companies, particularly in sectors where energy costs have become a critical barrier to expansion and investment.
Business Secretary Jonathan Reynolds described the move as a direct response to industry demands. “Tackling energy costs and addressing skills shortages have been the top priorities for businesses. This government has listened,” he said.
The government stated that the energy relief measures would be funded through structural reforms to the energy system and would not result in increased household bills or taxes. The scope and eligibility of the scheme will be determined following a formal consultation process.
As part of the package, energy-intensive manufacturers will also be exempted from certain levies, including the Renewables Obligation, in a bid to enhance their global competitiveness.
The new industrial strategy comes as the UK faces mounting pressure to revitalise its sluggish economy. Business leaders have long argued that elevated energy costs—among the highest in Europe—have placed British firms at a disadvantage compared to international competitors. Industry group Make UK previously called for the removal of climate-related levies that burden manufacturers.
The strategy is also positioned as a response to global shifts in trade and investment policy, particularly in the wake of protectionist measures like tariffs introduced during the Trump administration in the United States. Both the US and European Union have ramped up industrial support, prompting the UK to act to preserve its economic standing.
In addition to tackling energy costs, the strategy includes five targeted sectoral plans focused on areas such as advanced manufacturing, creative industries, clean energy, defence, and financial services. It also expands the remit of the British Business Bank, enabling it to channel greater investment into small and medium-sized enterprises.
The government has committed an additional £1.2 billion annually to skills development by 2028–29, addressing persistent gaps in the UK labour market. It will also introduce regulatory reforms, increase funding for research and development, and accelerate planning approvals to create a more agile business environment.
Industry groups have welcomed the announcement. Make UK called it a “giant and much-needed step forward,” noting its attention to long-standing challenges including skills shortages and capital access. The Confederation of British Industry (CBI) said the strategy sends an “unambiguous, positive signal” and lays a “bedrock for growth.”
This marks the UK’s first comprehensive industrial strategy in eight years and signals a renewed focus on long-term economic planning as Britain seeks to compete in a rapidly evolving global economy.
Jonathan Reynolds Secretary of State for Business and Trade UK at WEF
