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Spiralling gas prices 'will engulf British industry'

20/01/2006

Soaring gas prices in the UK are threatening British industry this winter, a new report claims.

Private manufacturers face a "bleak midwinter", with a particular strain placed on small and medium-sized companies, according to the Forum of Private Business (FPB).

A survey by the organisation suggests that there is a gas crisis looming in the UK and the FPB is urging the government to take action before it "engulfs" British industry.

The UK business lobby group polled over 1,000 small and medium-sized firms in the manufacturing sector and more than a quarter said that their business was threatened by increasing energy costs, placing jobs at risk and pushing down production.

Gas prices have rocketed in recent months, amid concerns about a particularly cold winter, possible shortages and disrupted supplies. A dispute over prices for natural gas between Russia and Ukraine exacerbated the situation, driving prices up to record levels.

Eight out of ten businesses quizzed rated the government's communication with and advice to firms in relation to the gas crisis as 'poor' or 'very poor'.

"We now see that many small to medium-sized manufacturers are at the mercy of gas supplies and prices," FPB chief executive Nick Goulding said.

"Furthermore the government has failed to properly communicate with business. There has been no guidance from government on how to deal with gas shortages. This has given the wrong signals and bosses are understandably worried because it looks disorganised."

The price of gas has risen by a third in two years and a number of companies in Britain have already reduced production as a result.

Analysts are predicting that gas prices will increase further this year. The Met Office has warned that this winter will be unusually harsh and the UK might face a shortage in gas supplies as a result.

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