Manufacturing sector on track for three years of falling employment.

Britain faces years of industrial decline as net zero sends factory energy prices rocketing, economists have warned.

EY Item Club said Britain’s manufacturing sector was on track for three years of falling employment in the face of energy costs that are four times as high as those in the US, and 50pc more than those paid by factories in France and Germany. The Telegraph has the story.

Factory output is also expected to shrink by 0.6pc this year, the influential forecaster predicted.

Peter Arnold, the UK chief economist at EY, said the sky-high energy costs were the result of running down fossil fuels without a reliable replacement.

He said: “UK businesses currently pay the highest electricity prices in the developed world. This has been driven by high and volatile global energy prices, particularly for gas, which has left the UK exposed given its reliance on gas for electricity and heating and combined with declining oil and gas production, has not been helpful for prices.

“The UK has invested heavily in renewables like wind and solar, but these are intermittent, as opposed to say nuclear power, and this can also increase pricing volatility.”

Ed Miliband, the Energy Secretary, is racing to move Britain towards an entirely clean energy system by 2030, necessitating a switch to energy sources that are quicker to construct than nuclear – such as wind and solar.

Mr Miliband has argued that breaking Britain’s reliance on oil and gas will ultimately lower energy bills. However, Kemi Badenoch, the Conservative Party leader, and industrialist Sir Jim Ratcliffe have both blamed net zero policies for surging prices.

Sir Jim, the Ineos boss, warned in January that Britain’s chemicals industry was facing “extinction” because of high energy bills and the shift to net zero. After Ineos closed down a synthetic ethanol centre in Scotland because of carbon taxes and energy costs, Sir Jim said: “We are witnessing the extinction of one of our major industries as chemical manufacture has the life squeezed out of it.”

Ms Badenoch said the UK’s goal to reach net zero carbon emissions by 2050 is “impossible” and risks “bankrupting” the country.

She said in a speech this week: “Our success at reducing emissions has also come at a significant cost: the highest electricity bills in the developed world.”

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