FDF urges government to provide regulatory certainty to boost confidence and investment
The government must establish a stable regulatory environment for a chance to spur growth post-budget, according to industry analysis published in the The FDF State of Industry report Q3 2024, which covers July-September 2024.
The figures were revealed in the Food and Drink Federation’s (FDF) latest State of Industry report, which tracks business confidence and trends in the UK’s largest manufacturing sector. The data, which covers Q3 2024, found that business confidence remained at the same level as Q2 (-6%) with many food and drink manufacturers looking to boost investment in the next 12 months. Two fifths of businesses plan to increase their investment in R&D (40%), plant and machinery (44%), and skills and training (44%) in the coming year.
The FDF argues that the current business environment is creating obstacles. More than half (53%) of manufacturers say they’re likely to limit investment over the next 12 months due to uncertainty about upcoming regulation. For example, the upcoming Extended Producer Responsibility (EPR) legislation, recent National Insurance employer contribution changes and minimum wage increases taken together will add billions of pounds in additional costs for UK food and drink manufacturers in 2025. Ensuring businesses have clearer guidance from government and are appropriately consulted ahead of these, and any future legislation, will provide the confidence they need to drive investment.
Other major barriers include taxation (31%) and lower financial returns due to a less favourable business environment (31%). With a £14 billion untapped growth opportunity available to food and drink manufacturers, Government creating a more supportive and stable business environment can provide businesses with the confidence they need to unlock this investment in the UK.
The Government’s latest Budget could also impact this fledgling opportunity for business growth. A separate flash survey undertaken in November found that nearly three quarters (71%) of food and drink manufacturers believe the Budget will have a negative impact on employee pay. With unfilled vacancies rising to 5.1% in Q3 2024, and a quarter (25%) of businesses highlighting that labour and skills shortages will limit their investment in the year ahead, it’s vital that Government provides clear guidance and listens to input from business on new employment regulations as soon as possible.
Balwinder Dhoot, director of industry growth and sustainability, The Food and Drink Federation, said: “Investment is vital to the long-term health and resilience of our industry, as well as to countering inflation. While it’s positive to see businesses planning to boost their investment in UK production, this will have been impacted by raised costs in the budget.
“With businesses facing billions of pounds of additional tax and regulatory costs next year, we urge Government to double down on its growth mission. From removing barriers to trade, to reviewing regulation and planning rules, adopting a more collaborative relationship with business, Government can do more to boost business and consumer confidence, and drive investment.”
