The Food and Drink Federation (FDF) has published its Q2 State of Industry Report, finding that 50% of industry regards the UK’s relationship with the EU as a “top priority” for the Government.
Business confidence fell to -6% in Q2 2024 according to the report, the first negative result since Q2 2023. According to 70% of respondents, growing sales in the UK market remains the top priority following lower food sale volumes (down 6% from January 2020).
It was found that nearly nine out of 10 manufacturers expected to maintain or increase investment levels over the coming year. FDF said that this was a “signal that the sector had turned the corner” after the “policy turmoil and external shocks” that have impacted food businesses and led to a 30% drop in investment since 2019.
The report also found that businesses remained concerned about policy and regulatory uncertainty, and non-tariff barriers could risk “denting the industry’s export competitiveness”.
It was reported that:
- Health certificates are an export barrier for 40% of businesses
- Administrative costs are an issue for 54% of manufacturers
- Half of industry regard an improved relationship with the EU as a top priority
- Employment and skills policies was regarded by 39% of industry to be a priority.
Businesses expressed that reforms to the Apprenticeship Levy would help the industry thrive by addressing both the skill gaps and labour shortages, and it was reported that over half of manufacturers would like to be able to use the Levy funds for engineering conversion modules or business improvement techniques
FDF also said the findings showed that the Government’s Industrial Strategy would be key to increased investment levels, and said that by working in partnership with Government, businesses could “seize investment opportunities and remove barriers to growth”. Over a third of manufacturers shared that they planned to increase their R&D spend over the coming year.
Supporting SMEs “must be a priority”
Balwinder Dhoot, FDF’s director for sustainability and growth said: “Despite investment in our sector being down by a third compared to 2019, it’s encouraging that manufacturers are planning to increase or sustain their investment this year. By working in partnership with government we can seize investment opportunities and remove barriers to growth. It is crucial for Government to help establish a stable business environment that removes the burden of unnecessary and costly regulation and bureaucracy.
“We are pleased with Government’s efforts to improve relationships with the EU and reducing barriers with this significant trading partner. Providing targeted support for smaller businesses – who make up 97% of our sector and who are disproportionately impacted by these costs and pressures – must be a priority. This approach will help make the UK the best place to invest and innovate in food and drink production.”
