Unipart wants the UK to match US subsidies (image: BBC)

Another British company has threatened to move operations to the US or Europe because of more attractive subsidies on offer.

John Neill, head of the car parts and logistics giant Unipart, said UK companies could not “compete on a level playing field”.

Mr Neil said the US Inflation Reduction Act (IRA), passed last year, was offering firms a “completely game changing set of incentives and fiscal support” to invest in green energy projects. Firms must be operating in the US to receive government backing.

“I’ve asked our team to think very carefully about our investment strategy in the US and our US operations and whether we should be pivoting more into those markets and possibly also into our European companies,” said Mr Neil who is also a member of the Society of Motor Manufacturers and Traders.

“For us to invest we need to understand what Britain’s strategy is and what our regulatory framework is going to be. And we’re not clear about any of that.”

The European Union is considering a similar approach, but the UK Chancellor Jeremy Hunt has warned it would mean spending taxpayers’ money “on projects that would have happened anyway.”

Other business leaders have warned that the UK is at risk of losing investment unless it matches the US policy. Companies in highly competitive and capital-intensive production such as Volkswagen and Jaguar Land Rover owner Tata of India are being tempted by what the US is offering.

Scottish battery producer AMTE Power has warned that the UK needs to remain at the forefront of the technology or risk losing projects to the US.

AMTE Power has plans to build a megafactory on the site of the Michelin tyre factory on Tayside with longer term intentions to develop it into a gigafactory employing hundreds of workers making batteries for electric vehicles.

But the Thurso manufacturer said it is difficult to justify keeping production in the UK. Alan Hollis, chief executive, says its priority is Dundee but it wants the UK and Scottish governments to provide grant funding to cover up to 20% of the capital investment of its plant.

He also called for consider further incentives to support operating costs, in order to remain competitive with suppliers in America.

He said: “The answer is perfectly clear [about] where the most economic place for the gigafactory will be. We don’t have a competitive environment in the UK at this moment in time.

“Unless we make the UK a competitive place for battery manufacturer, we probably won’t end up with a battery manufacturing industry in the UK. And the consequences of that are clear for the automotive industry and for the energy storage sector as well.”

The government has said it will respond to the US measures when it is clear what the European Union will do. Labour has promised a British version of the Inflation Reduction Act, but has not clarified how much funding it would allocate.

UK firms are fearful that the EU is already moving to respond to the US, with Spain fast-tracking a round of massive support for the manufacture of electric vehicles and batteries.