What's Happening?
Business confidence among food and drink manufacturers has significantly declined, reaching -60% in the third quarter of 2025, according to the Food and Drink Federation's latest report. This marks the sixth
consecutive quarter of negative confidence, driven by uncertainty over taxes, regulatory clarity, and rising costs. The industry is particularly concerned about potential additional taxes and burdensome regulations, with 88% of manufacturers worried about increased costs. Additionally, 45% are concerned about policies that could negatively impact household finances, as food sales volumes have dropped by 8.3% since September 2019. Inflationary pressures remain high, with production costs rising by 5% over the past year, exacerbated by regulatory changes such as the new EPR packaging tax and adjustments to National Insurance Contributions.
Why It's Important?
The declining confidence among food manufacturers highlights significant challenges facing the industry, including the impact of regulatory pressures and inflation on production costs. These factors are forcing companies to pass costs onto consumers, affecting household spending and potentially leading to reduced consumer demand. The industry's concerns about additional taxes and regulations could hinder growth and investment, impacting job creation and economic contributions. The Food and Drink Federation is calling for government partnership to unlock growth opportunities, emphasizing the need for support in technology and innovation to drive productivity and sustainability.
What's Next?
The upcoming Budget presents an opportunity for the government to address the industry's concerns by providing a stable regulatory environment and supporting growth initiatives. The Food and Drink Federation is advocating for policies that facilitate investment in technology and innovation, which could unlock a £14 billion growth opportunity. Additionally, expanding R&D tax credits and the Growth and Skills Levy could support the development of healthier food options and higher-skilled jobs. The industry is looking for government collaboration to ensure food security and economic growth.
Beyond the Headlines
The ongoing challenges faced by food manufacturers underscore the need for a comprehensive approach to regulatory reform and economic policy. The sector's contribution to the economy and employment highlights its importance in the broader economic landscape. Addressing these issues could lead to long-term benefits, including enhanced sustainability practices and improved consumer options. The focus on technology and innovation could also drive significant advancements in food production and distribution.
