The Food and Drink Federation (FDF) has published its Q2 State of Industry Report, which tracks business confidence and trends in the UK’s largest manufacturing sector.
The analysis reveals that nearly nine out of ten food and drink manufacturers expect to maintain or increase investment levels over the coming year. The FDF stated that is a signal that the sector has turned the corner after the policy turmoil and external shocks that have disproportionately impacted food and drink businesses, leading to a 30% drop in investment since 2019.
The findings underscore that the food and drink manufacturing industry is ready to invest and that the government’s Industrial Strategy will be key to this. The FDF said that by working in partnership with government, the industry can seize investment opportunities and remove barriers to growth.
The study noted that advancing innovation and adopting new technologies are critical for economic growth and to safeguard the UK’s long-term food security. Notably, over one-third of manufacturers plan to increase their R&D spending over the coming year.
The report also found that businesses remain concerned about policy and regulatory uncertainty, and non-tariff barriers could risk denting the industry’s export competitiveness. The FDF highlighted that there is a big opportunity to remove these obstacles and drive domestic and international investment to increase growth, productivity, and good jobs. Health certificates were found to be an export barrier for 40% businesses, administrative costs are an issue for 54% of manufacturers, and half of the industry regard an improved relationship with the EU as a top priority.
Bal Dhoot, FDF’s Director for Sustainability and Growth, commented: “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.”
