‘Just worry upon worry’: Europe faces a bleak winter as supply shock pushes factories to the brink
Manufacturers across Europe, from a Shropshire aluminium plant to steel firms in Hamburg, are facing a severe energy crisis this winter after wholesale gas prices doubled in two months. The surge follows renewed fighting between the US and Iran, which has disrupted shipping through the strait of Hormuz, a vital route for a fifth of the world's oil and gas. This has left industrial firms, already weakened by years of Brexit, Covid and previous energy shocks, weighing job cuts, shutdowns and rescheduled maintenance to survive rising costs.
British wholesale gas prices hit 205p per therm this week, the highest since Russia's invasion of Ukraine in 2022, and up from 78p at the end of February. Europe enters winter with gas storage around 67% full, well below the usual 80% seasonal average, with Germany only about half full and both Germany and the Netherlands likely to miss their storage targets. Bridgnorth Aluminium, employing 370 people, now spends roughly £1.1m a month on energy, 18% of its costs, and is considering a longer Christmas break or bringing forward maintenance to cut output during peak pricing; separately, the Item Club has forecast Britain could lose 163,000 jobs in 2026 because of the crisis, concentrated in manufacturing regions such as south Wales and the Humber.
In short
- Gas prices doubled in two months amid US-Iran conflict disrupting Hormuz shipping
- Europe's gas storage is well below seasonal average heading into winter
- UK forecasters warn of up to 163,000 job losses in 2026
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Governments should cushion manufacturers from the energy shock because a sudden rise in costs could trigger closures, job losses and lasting damage to industrial communities and supply chains. Temporary, targeted support could preserve productive capacity and workers’ livelihoods while firms adapt, especially when the disruption stems from conflict and vulnerable shipping routes.
The case against
Broad subsidies or price controls could leave taxpayers carrying a large and uncertain bill while weakening incentives to reduce energy use or invest in more resilient supply. Governments may have to prioritise limited funds for households and essential services, and firms could instead adjust output, maintenance and investment in response to higher prices.
Explained simply
Europe’s factories use large amounts of gas and electricity to make goods such as aluminium and steel. Many were already under pressure from the effects of Brexit, the Covid pandemic and earlier rises in energy costs.
The latest price rise is linked to fighting between the US and Iran, which has disrupted shipping through the Strait of Hormuz, a narrow sea route carrying a significant share of the world’s oil and gas. Europe also has less gas in storage than it usually does at this point in the year, leaving businesses exposed to further supply problems.
When energy costs rise, factories may cut production, delay maintenance or reduce staffing to manage their bills. That can affect workers and manufacturing towns as well as the firms that supply goods to other industries.
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