Manufacturers are warning government that the growing cost of raw materials could choke off the recovery for UK factories.

The Engineering Employers’ Federation (EEF) says 40 per cent of manufacturers’ operating costs are materials – and 75 per cent of EU manufacturers have seen these costs increase since 2000. In fact, average prices have doubled in that time, it says.

EEF says the problem is being caused by growing middle-classes in developing countries, increase in demand for all commodities and an over-reliance on China for strategic supplies. Demand for commodities is expected to increase between 30 and 80 per cent by 2030.

It says the UK lacks a plan to cope with these risks, unlike many other “manufacturing nations”. EEF is calling on the government to implement the following changes:

• Establishing an Office of Resource Management to strategically co-ordinate action across Whitehall

• Thoroughly and regularly assessing material supply risks and vulnerabilities

• Providing stronger incentives for resource efficiency to help overcome market failures

• Regulating waste so that we extract more economic value from what we discard.

Susanne Baker, senior policy advisor at EEF, said: “Manufacturers have sounded the alarm over the growing risks to material supply and others are now picking up the clarion call.

“But while competitor nations are already taking evasive action, our Government is in danger of burying its head in the sand.”