FDF’s latest Business Confidence report suggests that optimism in the food and drink manufacturing sector improved in the final quarter of 2019 with the outlook also more positive.
Despite official data signalling weak investment and growth, the FDF’s survey showed net confidence in the industry had improved by 29 percentage points since the first quarter of 2019. However, it remained in negative territory as businesses continued to be impacted by increased input costs and reduced product margins.
Manufacturers are more optimistic about future business conditions, with the share of companies predicting a decline in UK-wide business confidence having fallen by over a third. Larger businesses were found to be more optimistic about the year ahead for the UK economy than SMEs.
Meanwhile, 47% of manufacturers foresee UK business investment rising in 2020, and 63% see increased domestic demand as an opportunity for their business this year. Over 40% said they are looking forward to increased certainty over the UK’s future EU relationship.
Key concerns for businesses going into 2020 included the cost of ingredients, inconsistent policies on plastic reduction, and border/customs issues – all of which were highlighted by over two-thirds of manufacturers.
Planned investment in new product launches and new machinery are seen as opportunities for over a third of manufacturers in 2020. Other opportunities included increased demand for healthy food products.
However, a wide range of practical factors relating to Brexit were also highlighted as barriers to success. These included UK import tariff uncertainty, and the possibility of failing to secure a free trade agreement with the EU, all of which were reported by over 50% of manufacturers.
FDF Chief Executive Ian Wright CBE said: “It’s no surprise that the industry remains troubled following a period of sustained uncertainty, with our future relationship with the EU still unresolved. But our industry is phenomenally resilient.
“FDF is absolutely committed to working with the Government and the devolved administrations to develop detailed plans and practical solutions for our vital industry as we leave the EU. It is essential that we minimise friction in whatever way possible, while maintaining high standards for UK food and drink.”