EY UK Energy blog

Investment in energy is essential for the UK economy. But reform mustn't drag on

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Posted: Thursday, 8 November 2012 at 4.00pm

You may have seen last week's press coverage on Powering the UK – Investing for the future of the Energy sector and the UK. We – myself and colleagues Tony Ward and Bill Easton – were commissioned by Energy UK to write the report to look at the impact of the Energy or Power & Gas sector on the UK economy.

Amidst the media attention around changes in energy prices, it goes often unnoticed that the sector does actually provide a significant contribution to the economy and growth. Energy companies' investment is in fact at a 20 year high with £43 billion invested in the sector over the last 5 years against a backdrop of economic recession. The industry also bucked employment trends with 6% growth of direct employment between 2010 and 2011, and some regions showing employment increasing by 45% since 2008, at a time of falling or flat employment in the overall economy.

Our report highlights the critical role energy has in the UK's economic recovery but it's vital that we maintain policy momentum to provide the right incentive for continued investment. Whilst £10bn investment in the sector in 2011 is the highest in 20 years is still short of the rate required to meet the ambitious government low carbon agenda - about £15bn per year. In the report we draw upon the views of a number of potential investors in the sector on the factors shaping their investment appetite and decisions - investors across supply chain businesses, energy suppliers and analysts. We know that investors still have investment plans, but they need confidence to invest soon.

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