UK chemical sector voices concerns over lack of clear strategy, uncertainties

London – Businesses across the UK chemical supply chain are "increasingly whether the government wants a viable domestic chemical sector to survive in the UK," according to a new survey by the Chemical Business Association (CBA).

The CBA’s Autumn 2025 budget survey found “near-universal” concern about the government’s economic direction, with respondents citing the 'lack of a clear strategy, rising employment costs and ongoing regulatory uncertainty' as major constraints on investment and long-term planning.

More than 96% of respondents said there is "a lack of clarity" in the government’s plans for the sector, while around 80% reported that their business has already been negatively affected by government actions and decisions.

The survey grouped business concerns into three areas: challenges arising from government policy; long-standing structural issues within the UK chemical supply chain; and global pressures affecting trade and competitiveness.

While respondents acknowledged external factors such as a global economic slowdown, US tariffs and competition from low-cost imports, many said domestic policy uncertainty was "the primary driver" of declining confidence.

Rising employment costs, particularly 'National Insurance', were identified as the most frequently cited issue, with respondents saying these costs were squeezing margins, contributing to hiring freezes and delaying investment.

Uncertainty surrounding UK REACH was also highlighted, with respondents warning that delays and lack of clarity are hindering innovation and discouraging overseas suppliers from supporting UK operations.

Many participants, said CBA, warned that "continued inaction" could risk accelerating the offshoring of chemical activity.

The survey also pointed to high energy prices, weak trade arrangements and increasing regulatory divergence as factors undermining the UK’s competitiveness.

Respondents said the chemical sector’s strategic importance is being overlooked, despite its role in supplying downstream industries including pharmaceuticals, food and drink, energy, defence and manufacturing.

Around two-thirds of respondents said they expect the outlook to remain challenging in the near term, with limited scope for growth, particularly in the UK market.

However, around one-third identified areas of relative resilience, including food, cosmetics and defence.

Commenting on the findings, CBA chief executive Tim Doggett said the survey showed "a sector under growing strain, facing a combination of long-standing challenges alongside new and intensifying pressures."

Most concerning, he noted, is that many members are experiencing significant business challenges as a result of government actions and decisions.

Such members, Doggett said, "are openly questioning whether government is capable of creating the conditions needed for growth.”

Stressing that 'confidence matters,', the CBA chief said the sector now needs "a clear signal of commitment from government and explicit recognition of its strategic importance – not just as an industry in its own right, but as a critical enabler of many others.”

Doggett warned that without greater clarity and stability, the UK risks losing strategically important capability that would be extremely difficult, if not impossible, to replace."

"Without decisive action to restore confidence and competitiveness, the UK risks sleepwalking into a crisis that will undermine its industrial base, supply chain resilience and national security," he concluded.