Manufacturers highlight lack of business confidence in UK
FOOD and drink manufacturers have called on Prime Minister Andy Burnham to ease the mounting pressure on the industry following a drop in UK business confidence.
The Food and Drink Federation (FDF) has sent a message to the PM stating that urgent action must be taken to support the wider industry following on from the firm’s latest State of Industry report which found that 88% of businesses reported that conditions have deteriorated since Labour came into power.
The report has highlighted that, over the past 12 months, the Britain’s food and drink manufacturers have seen production costs rise by an average of 3.8%, pushing them to pass this cost increase further down the chain and squeeze margins.
And as these businesses struggle to absorb the additional cost pressures, they have become increasingly more exposed to “external shocks”, says the FDF. The industry body has stated that over a third of manufacturers saw their costs rise between 5-10% as a direct result of conflict in the Middle East, while 72% of manufacturers now say they will have to raise prices for consumers.
As a result of this, the FDF has sent a message to the PM to help build up sector resilience ahead of his first UK Budget later this year. Some 75% of businesses, including 91% of SMEs, have said that the government should prioritise not increasing labour costs higher than inflation.
Over half (56%) of these businesses have also called for measures to reduce energy costs on businesses, while 50% have called on the government to bring in the SPS agreement to help reduce trading friction with the EU.
Balwinder Dhoot, director of growth and sustainability at the FDF, said: “Rising costs and policy uncertainty are dampening investment, so it’s no wonder that the mood among food and drink manufacturers has been persistently low. Especially with extreme weather conditions putting increasing price pressure on businesses, Andy Burnham and his team need to set a new direction for the food system and demonstrate that they take the nation’s food security seriously.
“Food and drink businesses have spoken on the measures that would help them invest and bring opportunities to the communities where they’re based. We hope to see some of these actioned in the upcoming Budget, to help restore confidence and build a more competitive, innovative and resilient food system.”
