Economic growth
The ONS has reported that GDP increased by 0.1% in February, following an increase of 0.3% in January (revised up from 0.2%). GDP increased by 0.2% in the three months to February 2024.
IGD Viewpoint
The latest data is evidence that the UK economy is returning to slow growth, having recently entered a recession (often defined as two consecutive quarters of “real terms” contraction).
Despite this welcome news, food and grocery businesses should not expect a quick improvement in the overall economic environment or in consumer prosperity.
New Viewpoint report
The new exclusive Viewpoint report on the outlook for the economy including GDP, labour and skills, consumers and government policy will be launched on 25 April.
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Climate change record
March 2024 was the warmest March on record according to The EU's Copernicus Climate Change Service. It was 1.68°C warmer than the average March temperature. This is the 10th consecutive record-breaking month. March 2024 was wetter than average in most of Western Europe .The UK government has announced a Farming Recovery Fund to support farmers who have suffered uninsurable damage to their land due to flooding this winter. However, the National Farmers Union has raised concerns about the fund.
Read our Resilience: climate change article for more information.
IGD Viewpoint
Part of this may be due to El Nino, but it is clear that climate change is happening at an alarming rate, threatening food supply chain resilience. Scientists warn that when global average temperatures are more than 1.5°C higher than pre-industrial levels, some of the impacts from climate change will be irreversible. The food system is central to whether the UK hits its legally binding Net Zero goal by 2050.
Businesses and entire sectors of the food industry have made ambitious Net Zero commitments, however, the system must re-double efforts to accelerate progress towards these commitments.
IGD's latest report Resilience: a system under pressure, outlines 10 risks, including climate change, which will put the UK food system under greater pressure in the future. It is free to download here.
Debt issues
The Financial Conduct Authority has reported that 7.4m people were struggling to pay bills and credit repayments in January 2024, down from 10.9m in January 2023. This is still higher than the 5.8m recorded in February 2020, before the cost-of-living squeeze began.
IGD Viewpoint
Despite this decline in the number of people experiencing difficulties with debts, many consumers are still cautious about unlocking spend for their food and grocery shopping.
Retail crime
The government has announced that assaulting a retail worker will be made a standalone criminal offence. The new offence will carry a maximum sentence of six months imprisonment. The British Retail Consortium recently reported “a massive increase in incidents of violence and abuse - which now number over 1300 a day similar to the levels last seen in the pandemic”.
IGD Viewpoint
This issue may be undermining industry attractiveness and more legal support could address this.