Economics bulletin 29 July

Date : 29 July 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 rising cost of living, the Ukraine crisis, labour shortages, COVID-19 and adapting to a new relationship with the EU.

UK recession highly likely

IGD believes that that recession in the UK is now highly likely as declining household incomes and rising inflation negatively impacts shopper sentiment and purchasing behaviour.

This is a key finding from our latest Viewpoint report, detailing the economic situation in the UK, the impact on consumers and the changing policy landscape. Watch our accompanying free webinar recording to gain insight into what the future holds for food and consumer goods businesses.

Global economic outlook worsens

The UK economy is predicted to be the worst performing economy in the G7 in 2023. The IMF have downgraded their forecast for the UK economy for 2022 by 0.5% to 3.2%. Economic output in 2023 is predicted to grow by only 0.5%, a downward revision of 0.7%.

For further insight please see here

Ukraine war to increase energy bills further

Russia has cut gas supplies to European countries to less than a fifth of normal levels. In response, the European Union have agreed to voluntarily reduce natural gas usage by 15% between August 2022 and March 2023.

This shortage of supply of gas into the EU is likely to inflate gas prices. Independent analysts are now predicting that the energy price cap could double to £3,850 per year in January. The Business, Energy and Industrial Strategy committee has suggested that financial help for vulnerable consumers must be updated to reflect the increased bills households will pay.

Food security inquiry

The Environment, Food and Rural affairs committee has launched an inquiry into food security in response to rising food price inflation, forecast by IGD to reach 15% in late summer.

The inquiry will consider:

  • The key factors affecting the availability of food and resilience of food supply chains
  • The outlook for UK food price inflation in the short and medium term
  • How the cost of living crisis is impacting access to healthy and nutritious food
  • How the government’s food strategy is likely to address issues across the food system

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