Politics Home | Q1 2026 CIA Business Survey: Dramatic change of policy direction needed to save Britain’s chemical industry

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”