The EEF manufacturers' organisation warned firms could be forced overseas unless costs were checked.
In its submission ahead of next month's Budget, the EEF said the cost of energy was the issue firms were most negative about.
A survey of 300 companies found half believed tackling energy costs was the biggest factor affecting expansion plans. The EEF said energy-intensive industries such as steel and chemicals should be shielded from "excessive" energy policy costs.
EEF chief executive Terry Scuoler said: "Rising energy costs represent a major threat to growth and could damage efforts to support and sustain long-term recovery. The UK cannot afford to pile even more unilateral costs on the manufacturing sector which is key to developing the UK's longer-term growth and stability.
"Many manufacturers now feel they are being severely penalised by high energy costs, some of which are being unilaterally imposed and are not shared by competitor nations."
The EEF also called on the Chancellor to take other measure including boosting skills training and giving more funding for business support services
The Chartered Institute of Personnel and Development said in its Budget submission the Government should review skills policy and spend more on the careers service.
Chief executive Peter Cheese said: "The UK economy has finally started to grow solidly again, but the deepest recession for decades has exposed critical underlying issues in our competitiveness and utilisation of skills."