Scottish businesses are facing renewed concerns over energy costs after a new report warned manufacturers could suffer an £85 billion blow as high electricity prices continue to weigh on industry.

Analysis published by Make UK in partnership with Ecotricity found that more than half of manufacturers identified energy costs as their biggest challenge, with a 13 per cent decline in UK manufacturing activity projected if pressures continue.

The report argues that Britain’s electricity market is “structurally failing manufacturers” and calls on the UK Government to accelerate reforms to the electricity system and prioritise industrial demand when upgrading the grid.

For businesses across the Highlands and Islands, where manufacturing, food production and engineering remain important employers, energy prices continue to be a significant concern amid wider pressures on operating costs.

High energy bills have been repeatedly cited by companies as a barrier to investment, expansion and competitiveness, particularly in sectors that rely heavily on electricity intensive processes.

The findings have also reignited political debate over Scotland’s energy resources and who should benefit most from them.

SNP MSP Gary Bouse said:

“Scotland is energy rich yet our businesses are being hammered by some of the highest energy bills in Europe.

“This report is yet more evidence to add to the mounting pile that demonstrates the UK state is in terminal decline and it is Scotland left paying the highest price.

“Westminster was more than happy to syphon off £400 billion from Scotland’s seabed, but has stood by while thousands of jobs are lost in our offshore industry and now we know our manufacturers are being hit the hardest too.

“Through a fresh start with independence, we will put Scotland’s energy in Scotland’s hands to back our key industries and lower bills for businesses across Scotland.”

The report arrives at a time when many manufacturers are already navigating rising wage costs, increased taxation and uncertainty over future investment.

Questions over energy pricing are likely to remain high on the agenda for businesses and policymakers alike, particularly as industries seek greater certainty over costs and long term planning.

While political parties differ on the solutions, the report underlines a challenge that many businesses recognise all too well, with energy bills continuing to influence decisions on jobs, production and investment.