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Last Updated: Monday, 25 September 2006, 09:16 GMT 10:16 UK
UK firms 'worry over energy cost'
Worker on Oxford mini production line
Manufacturing is an energy-intensive process
UK manufacturers are still worried about higher energy prices having seen costs jump by at least 30% in the past year, a report has said.

The Engineering Employers' Federation (EEF) said 92% of the 232 firms they questioned said that their electricity and gas costs had increased last year.

UK companies have been caught in a price squeeze caused by geopolitical concerns and supply shortages.

While those problems have eased, the EEF warned firms may still suffer.

92% of firms saw energy prices rise
Gas prices rose by an average of 55%
Electricity prices rose by an average of 42%
Four out of five firms saw gas prices increase by 30% or more
Three out of four firms saw power prices gain by 30% or more
80% of firms expect prices to rise over the next year
Only 4% of companies have reserve energy supplies
Source: EEF

"Despite recent falls, the price of energy remains higher than it was this time last year and there is little prospect of industry seeing any benefit for the foreseeable future," said EEF director general Martin Temple.

About a third of firms have tried to ease the effect of the higher costs by switching suppliers, but this has had a limited impact because many of them also tied themselves in to long-term contracts, the EEF said.

The business group added that most manufacturers would not benefit from any drop in prices until next year.

Many analysts have estimated that last winter was probably the peak for energy costs now that new supplies are set to come on line.

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