Understanding the recent accelerating decline of the UK chemicals sector
Author(s)
Bakkaloglu, Semra
Aubrey, Thomas
Type
Report
Abstract
Chemicals underpin key sectors including food and drink, pharmaceuticals, agriculture, defence and the green economy, while also providing high value-added jobs. However, the UK chemicals sector is experiencing an accelerating decline with significant implications for
productivity, trade, supply-chain resilience and national security. Since 2020, the sector’s real GVA has fallen by nearly 40% while the trade deficit for Chemicals has increased by more than five-fold. Crucially, evidence from the NAEI and Companies House indicates a rising closure of plants and firms.
While there is a significant variation in the performance across subsectors of the Chemicals industry, the most concerning closure trend is in the higher value-added Other chemical products subsector, where the UK until recently had retained competitive strengths. This
competitive advantage is deteriorating for a combination of reasons including high electricity costs, rising regulatory burdens, weakening domestic supply chains, ageing assets and unfair trade practices related to Chinese overcapacity and dumping.
Industry and government need to work together to address these pressures for the UK to maintain a competitive advantage in the downstream specialty chemicals sector. This would prevent further negative productivity shocks, the loss of strategically important manufacturing capability, as well as increasing national resilience across life-maintaining supply chains.
productivity, trade, supply-chain resilience and national security. Since 2020, the sector’s real GVA has fallen by nearly 40% while the trade deficit for Chemicals has increased by more than five-fold. Crucially, evidence from the NAEI and Companies House indicates a rising closure of plants and firms.
While there is a significant variation in the performance across subsectors of the Chemicals industry, the most concerning closure trend is in the higher value-added Other chemical products subsector, where the UK until recently had retained competitive strengths. This
competitive advantage is deteriorating for a combination of reasons including high electricity costs, rising regulatory burdens, weakening domestic supply chains, ageing assets and unfair trade practices related to Chinese overcapacity and dumping.
Industry and government need to work together to address these pressures for the UK to maintain a competitive advantage in the downstream specialty chemicals sector. This would prevent further negative productivity shocks, the loss of strategically important manufacturing capability, as well as increasing national resilience across life-maintaining supply chains.
Editor(s)
Adam, Jo
Date Issued
2026-08-07
Citation
2026, pp.1-9
Publisher
Centre for Sectoral Economic Performance, Imperial College London
Start Page
1
End Page
9
Journal / Book Title
Financial Times
Copyright Statement
© 2026 The Author(s). This work is licensed under a Creative Commons Attribution-Non Commercial-No Derivatives 4.0 International License.
Publication Status
Published