Economics bulletin 27 May

Date : 26 May 2022

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 Ukraine crisis, the rising cost of living, labour shortages, COVID-19 and adapting to a new relationship with the EU.

Energy bills support

The government has announced a package of measures to support households as they cope with rising energy bills.

The measures include:

  • All households will receive a £400 discount on energy bills from the autumn. This scheme replaces the original £200 rebate.
  • Additional support for households on means tested benefits and pensioners.
  • A temporary Energy Profits Levy on oil and gas firms to raise £5bn, to pay in part for this spending.

See here for further details including IGD opinion.

The UK’s energy regulator Ofgem recently predicted that the energy price cap is expected to rise by 40% in October. The average household bill is likely to increase by a further £830 to reach around £2,800 per year.

Earlier this month the Bank of England forecast inflation will peak at around 10% in Autumn once the energy price cap is lifted.

To read more insight on the future of food prices and how the economy and shoppers may react, read our latest Viewpoint report and look out for our Viewpoint Special: Exploring the outlook for food price inflation – due out in June.

Global recession threat

The head of the World Bank has stated that there is an increased possibility of a global recession due to rising costs for energy, food and fertilisers. COVID-19 lockdowns in China are also adding to fears for a recession.

Last month, the International Monetary Fund downgraded its global GDP forecast for 2022 by 0.8% to 3.6%.

Environmental labelling trials

Four retailers – Co-op, Morrisons, Sainsbury’s and Tesco – will be trialling environmental labels in a virtual reality setting this summer, as the food industry moves one step closer to developing a harmonised environmental labelling scheme.

The trials are the latest phase of a workstream kicked off by IGD at the end of last year, to mobilise the food industry to develop a harmonised solution to environmental labelling.

See here for more details.

Gene editing

The government has introduced the Genetic Technology (Precision Breeding) Bill to Parliament. The bill aims to promote the research and development of genetically edited plants.

Genetic editing refers to the removal of parts of a plants DNA, in order to change certain characteristics such as disease resistance and nutrition content.

This is an England only bill. Concerns have been raised by industry about ensuring alignment in approaches with the devolved nations.

Immigration in agriculture

The government has announced a call for evidence focussed on the role the immigration system plays in the agricultural sector. Key areas under investigation include the Seasonal Agricultural Worker Pilot and the suitability of the visa sponsorship scheme.

More economic news and analysis

Sign up to our bulletin

Our round-up of the latest economic and political news, focused on FMCGs