FDF’s recent data found that business confidence dropped to 47% at the end of 2024, compared to the 6% the previous quarter. Rising costs have been cited as the biggest factor in this decline in confidence in the UK’s 12,500 food and drink companies. In addition, energy prices, employer’s national insurance contributions, and the EPR packaging tax, due to come into effect in October, have also added further pressure to the sector.
Addressing Challenges in UK Food and Drink Manufacturing
In response, the FDF has launched an Ingredients for Growth report. This includes 40 actions that government can take to help food systems become green, adaptive, productive, and innovative.
The report highlights six key industry asks to remove roadblocks to growth:
Key Industry Asks for Growth in UK Food and Drink Manufacturing
- Secure a fair share of the UK’s R&D spend for food and drink manufacturing, to support industry investment in new product development and healthier options for consumers and the transition to net zero. With industry investment down 30.5% compared to 2019, it’s critical that food and drink receives its fair share of government funding and support to unlock innovation in the UK’s largest manufacturing sector.
- Co-create a workforce and skills plan with Skills England to support our industry as we transition to a higher-skilled, higher-wage workforce. This would be an investment in communities in every place and region of the UK. With vacancy rates more than double those seen in wider manufacturing, investing in skills is vital to plug this gap and to create new opportunities for both young people and those mid-careers, in a key part of the everyday economy.
- Simplify the R&D tax credits system to help more businesses that are struggling to invest in technology to improve productivity and to innovate healthier products. There’s significant scope to accelerate the adoption of technology across our sector’s 12,500 businesses, with a £14bn growth opportunity for the taking.
- Ringfence the £1.4bn annual cost of Extended Producer Responsibility (EPR) to ensure these fees are only used on improving the UK’s recycling infrastructure and not to fund local authority funding gaps. This money is for yoghurt pots, not potholes.
- Prioritise a more strategic approach to EU trade relations to revive falling EU exports, which are down more than a third since Brexit. The EU Border Target Operating Model and Single Trade Window are essential to this and to ensuring profitable trade with the UK’s largest trading partner.
- Simplify regulations and remove unnecessary red tape to help businesses, particularly the sector’s 12,000 SMEs, focus on growth and productivity.
FDF’s Commitment to UK Food and Drink Manufacturing Innovation
FDF CEO Karen Betts said: “We want the UK to offer a much more competitive environment for international and domestic investment in food and drink, to ensure we’re a world-leading destination for new products and ground-breaking research, as well as nurturing iconic brands that are loved here and abroad. But with pressures on industry mounting, government must act to remove the roadblocks and accelerate growth. Together, we have the ingredients to make the UK the best place in the world to run a food and drink business.”