Economics bulletin 15 September

Date : 14 September 2023

Your overview of economic and policy news with a focus on the food and consumer goods industry. Featuring the latest developments and guidance on the rising cost of living, the Ukraine conflict, labour shortages, policy developments and adapting to a new relationship with the EU.

Emerging threats

A number of potential new disruptors to the UK food supply chain are already emerging and may manifest over the next 24 months. These include:

  • Potential disruption and confusion due to UK border changes
  • Changes to the farm subsidy system
  • Risks to food production due to climate change and associated extreme weather
  • Under investment
  • Rising interest rates discouraging future investment

It has never been more important for leaders in business and government to collaborate to rebuild resilience in the food supply chain.

Read our latest Viewpoint Special report: Rebuilding economic resilience in the UK food supply chain or download our one-page Executive Summary to understand the key issues impacting the food supply chain and the emerging threats.

Rising incomes

The Office for National Statistics (ONS) has reported that average pay growth in the UK exceeded the rate of CPI inflation in July for the first time since autumn 2021.

IGD Viewpoint: This is welcome news and may help to bolster consumer confidence. However, inflation has eroded the value of wages significantly over the last two years and it will take some time for wages to return to the previous level and many will remain under pressure due to rising interest rates and taxation.

See our full analysis.

Unemployment rises slightly

The latest labour market data reveals that demand for labour is weakening, a little. Unemployment is up by 0.5% on the quarter to 4.3%. The number of vacancies declined by 64,000 on the quarter to 989,000. Vacancies fell on the quarter for the 14th consecutive period.

GDP declines

The ONS has reported that GDP declined by 0.5% in July 2023 but increased by 0.2% in the three months to July 2023. ONS suggests that part of this may be associated with major industrial action, especially in healthcare. Retail also showed a large downturn, possibly due to unusual adverse weather in July.

IGD Viewpoint: It is worth noting that monthly GDP data is published as an estimate only. ONS emphasises that monthly data is volatile and that quarterly data is more reliable. Many of the reasons for the decline in GDP can be associated with specific unusual events. It may not be indicative of a fundamental economic downturn.

Support for farmers

The government has set out further support for British farmers. This includes:

  • Celebrating Back British Farming Day
  • An accelerated payment to farmers who have a live Sustainable Farming Incentive 2023 (SFI) agreement before the end of the year
  • A new package of measures to cut red tape

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