UK food and drink manufacturers have called on Prime Minister Andy Burnham to “ease mounting pressure” on the sector.
A survey by trade association The Food and Drink Federation (FDF) found business confidence remained in negative territory for a ninth consecutive quarter.
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The trade body’s latest State of Industry report put net business confidence at -31% in the second quarter, an improvement on -64% in the previous three months.
However, the FDF said 88% of respondents reported business conditions had deteriorated since Labour came into power in 2024 while 91% said conditions were the same or worse than in the first quarter of this year.
The report found average production costs – including labour, energy and ingredients – rose 3.8% over the past 12 months. The FDF claimed that tightening margins are limiting manufacturers’ ability to invest, with 87% of businesses reporting no plans to increase investment in skills and 84% saying they did not plan to increase spending on R&D over the next year.
The federation also pointed to supply chain shocks, claiming the conflict in the Middle East has driven cost increases of 5–10% for more than a third of manufacturers. While 60% said they had so far absorbed the additional costs, 72% indicated they would need to raise prices, suggesting impacts could feed through to consumers into next year.
Ahead of the Burnham-led government’s first Budget, the FDF said manufacturers want ministers to prioritise measures focused on labour costs, energy prices and regulatory burden. In the survey, 75% of businesses – including 91% of SMEs – said the Government should avoid raising labour costs above inflation.
Some 56% wanted action to reduce energy costs, while 50% urged a review of regulation to “limit the regulatory burden”, the FDF said.
The top measures to “ease cost pressures” were no above-inflation increases to the minimum wage, measures to reduce energy costs and subsidising the Extended Producer Responsibility packaging scheme.
Another 50% said the Government should bring in a sanitary and phytosanitary agreement to reduce friction in trade with the EU, and 34% wanted support on skills.
The survey was carried out between 13 April and 1 May 2026, ahead of Burnham being appointed prime minister, the FDF noted.
“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,” Balwinder Dhoot, director of growth and sustainability at the FDF, said.
