UK 'on a knife-edge' as gas prices surge

A surge in gas prices to record levels will force some manufacturers to stop production, the head of the country's largest employers' group warned yesterday.

Sir Digby Jones, the director-general of the CBI, said spiralling prices would make it uneconomic for energy-dependent businesses to keep operations running.

Yesterday one company said it had turned down production levels because of high prices and warned the country was "on a knife-edge". The warnings came as wholesale gas prices surged 37 per cent to a record 255p per therm in London.

Ineos Chlor, the chemicals giant, said yesterday it had been running its plants at Runcorn, Cheshire, at 30 per cent capacity since Monday. Andy Waring, its energy purchasing manager, said: "We are juggling to use the chemicals we have as effectively as we can. The country is on a knife-edge at the moment, to put it mildly, so if there's fall in supply or a cold snap - and it's forecast to get colder - then things could get bad quite quickly."

The Energy Intensive Users Group said the situation was "as close as the UK has got" to a national gas emergency. There were similar warnings in November when gas prices hit a record. Yesterday Sir Digby said: "I trust that ministers will recognise that CBI warnings last November were not alarmist. With prices this high, some heavily energy-dependent firms could be forced to turn down or shut production."

The Government sought to play down concerns of a full gas supply emergency. Alan Johnson, the Trade and Industry Secretary, said: "Whilst it is clear that we must not be relaxed about the current situation, it is equally important that we do not cause unnecessary panic."