The Food and Drink Federation (FDF) Q1 2021 Business Confidence report has revealed that net confidence is on the rise.

According to the report that summarises member sentiment, net business confidence rose in Q1 to reach -14%, compared to -34% in Q4 2020. This is attributed to the UK government’s vaccine rollout and the easing of lockdown restrictions.

Decreased domestic sales continued in Q1 2021, driven by low levels of domestic hospitality and foodservice sales. Over a third of businesses reported increased domestic retail sales, output and productivity in Q4 2020.

There was optimism about this year’s economic conditions in the UK, with three quarters of respondents expecting business output to increase and two thirds expecting business confidence to rise.

Concerns raised included the unemployment rate and consumer price inflation. More than half of respondents expected these to rise in the coming months.

Among the key opportunities that businesses saw for 2021 were increased domestic demand (retail, hospitality and foodservice), planned investment in new product launches and international trade opportunities. Border and customs issues, cost of ingredients and cash flow issues were named as key barriers.

Mark Harrison, economic research and employment policy manager at the FDF, said:

“After a turbulent year, food and drink manufacturers are beginning to see the light at the end of the tunnel following the challenges of 2020 and early 2021. The successful rollout of the UK’s vaccine programme and the lifting of lockdown restrictions has meant that businesses are more confident than they were at the end of 2020.

“Increased business costs and issues with customs are still causing concern for our sector. However, the future outlook is positive with two thirds of members expecting business conditions to improve as we head into the summer.”