UK chemicals industry warns of mounting competitiveness crisis

The UK government has unveiled a £350 million Critical Chemicals Resilience Fund, a move welcomed by the chemicals sector as manufacturers face growing pressure from high operating costs and increasing international competition. The announcement reflects concerns about the health of Britain’s energy-intensive manufacturing base.

Chemical industry representatives argue that the funding, while helpful, addresses only part of a broader challenge. Chemicals play a central role in the UK economy, providing key inputs for agriculture, pharmaceuticals, plastics, energy technologies and advanced manufacturing. Industry leaders warn that persistent energy costs, among the highest faced by manufacturers globally, are making the domestic production of essential chemicals such as ammonia and ethylene increasingly uneconomic.

As production capacity declines, the UK risks becoming more dependent on imports for critical materials, potentially exposing supply chains to geopolitical disruptions and weakening economic resilience. Sector executives are also calling for a review of the country’s net-zero strategy, arguing that current emissions accounting methods fail to capture the carbon footprint of imported goods. They contend that a more balanced approach is needed to support decarbonization goals while preserving industrial competitiveness and encouraging long-term private investment in UK manufacturing.

Source: City A.M.