‘No deal’ Brexit causing increase in costs, according to survey

Industry
01/11/2018 - 06:00
A ‘no deal’ Brexit has caused an increase in costs for 38% of food and drink manufacturers as a result of stockpiling, according to the Food and Drink Federation’s (FDF) latest business confidence survey.

With less than five months to go until the UK is scheduled to leave the European Union (EU), the quarterly survey has shown that economic uncertainty has seen net confidence amongst food and drink manufacturers decrease by 21 percentage points, when comparing results reported in Q1 to those reported in Q3.

Ian Wright, FDF chief executive, said: “These results tell us how seriously the food and drink industry, the UK’s largest manufacturing sector, takes a ‘no-deal’ Brexit. It is a grisly prospect to which we edge closer every passing day.

“The announcement from the chancellor – with measures to support productivity, exports, enterprise and investment – offers some respite for our small medium enterprise (SME) food and drink manufacturers.

“But there is significantly increased worry across the sector following the announcement of the chancellor’s new tax on plastic packaging. This will undoubtedly place many more financial burdens on UK food and drink manufacturers – that loads on cost at a time when just under three quarters of our members report that their packaging costs increasing. The storm clouds are gathering.”

Two thirds of businesses FDF spoke to identified future tariff implications as a risk to their business. Just under 60% of businesses surveyed thought business investment across the overall UK economy would fall in 2019, while more than 96% expect to see rising input prices.

For SMEs, who make up 97% of the UK’s food and drink manufacturing sector, retail market consolidation was one of the top three barriers expected to impact the success of their business in 2019. This followed the recent takeovers of Booker by Tesco, Nisa by the Co-op and the proposed merger of Sainsbury’s and Asda. 

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