In the current economic landscape marked by stagnant growth, soaring inflation on essential items, and the highest tax rates in the UK in seven decades, the significance of the food industry in bolstering the everyday economy is paramount, as outlined in a recent IGD report.
James Walton, IGD's Chief Economist, remarked, "The Autumn Statement includes special policy measures to support investment in selected, strategically important industries. These are listed as motor vehicles, aerospace and life sciences. Food production, processing and distribution are not mentioned, despite their huge economic value - food is the biggest manufacturing sector and is, arguably, more important to shopper welfare."
Michael Freedman, Head of Economics at IGD, commented on the Autumn Statement's potential to bring some relief to financially strained consumers, especially with the notable increase in the National Living Wage from £10.42 to £11.44 per hour.
He noted, "Our Viewpoint reports have highlighted how the least well off have been most impacted by the cost-of-living crisis. The 2% reduction in national insurance will benefit 27 million people from January, after the Christmas trading period. However, it is still unclear what the overall impact on consumers will be with changes to the energy price-cap to be announced shortly. Many are still feeling scarred by high food price inflation, relatively high interest rates and the highest tax burden for 70 years."
The report indicates a sharp decline in overall inflation, aligning with the government's objective to halve inflation, with the food and drink sector playing a significant role. However, inflation in other sectors remains high.
The food industry, as a major player in the UK's economy, is highlighted for its potential to drive growth and resilience at both local and national levels. The IGD's new Economics Viewpoint report, titled 'Powering the Everyday Economy - the role of the food system', underscores the critical importance of the entire food system for a thriving UK.
The food and drink sector, as the largest private sector employer, accounts for one in eight jobs and 40% of all UK retail sales, demonstrating its vital role in the economy.
The report also sheds light on the unique position of the food industry in employment, noting the rising unemployment rates and the industry's capacity to create job opportunities.
Despite the increase in base interest rates to curb inflation, the demand for goods remains subdued due to ongoing financial pressures, particularly affecting lower-income households.
Matt Stoughton-Harris, IGD’s Economics and Public Policy Manager, expressed concerns about recent delays in legislation related to waste and resources, with businesses seeking more certainty in the lead-up to the General Election.