Bulletin: £5bn opportunity from the food system

£5bn opportunity from the food system

IGD’s new Viewpoint report, Driving growth through a thriving food system, outlines strategic policy action could generate £5bn in investment, boost annual domestic production by £1.3bn by 2030, create 60,000 jobs, and strengthen the UK's food security.

The report explores how unlocking targeted food system opportunities in two identified sectors can drive economic growth while improving health, sustainability, and resilience – potentially delivering multiple benefits.

Download the report here.  

Join IGD’s one-day conference Future of the UK food system, bringing together 500+ food and drink leaders to shape a more resilient, sustainable, and thriving sector.

Food inflation – UK vs Europe compared

UK food inflation remains stubbornly high at 5.1%, outpacing the EU average. While not an outlier, the UK’s policy choices amplify the impact. Collaboration could ease consumer strain and boost domestic supply.

See our latest article - Food inflation rising – is it just us?

EU Deforestation Regulation delay

The European Commission has proposed a further 12 month delay to the enforcement of the EU Deforestation Regulation (EUDR). This regulation aims to ensure that products consumed in the EU do not contribute to deforestation or forest degradation globally, and will do this by imposing strict due diligence requirements on companies trading seven commodities: cocoa, coffee, soy, palm oil, wood, rubber, and cattle.

EUDR was originally meant to come into effect in December 2024 but was delayed to 2025, and the new proposal would see a further delay, likely to December 2026. Any company importing or exporting those commodities within the EU (even if they are not an EU headquartered company) will have to comply with these requirements.

IGD opinion

Businesses will likely welcome this additional delay as it gives more time to prepare for new and complex reporting requirements. The UK Government is planning to introduce its own scheme to tackle deforestation, with different reporting requirements. This additional delay creates an opportunity to align the two sets of reporting obligations, should the UK Government choose to do so.

Higher UK inflation and slow growth

The OECD’s latest Economic Outlook forecasts UK inflation to reach 3.5% in 2025, the highest among G7 nations, despite subdued consumer demand. UK economic growth is revised up to 1.4% this year, but slows to 1% in 2026.

Globally, performance was unexpectedly strong in early 2025, but rising tariffs, particularly from the US, are dampening momentum. The OECD warns of significant downside risks for 2026, though these could be offset by improved trade conditions or rapid AI adoption. Governments are urged to prioritise fiscal sustainability and structural reform.

IGD opinion

The UK government is focused on rebuilding finances and creating an environment in which businesses can flourish, especially businesses seen as the best growth prospects. Food system reform is also on the agenda. IGD’s new Viewpoint Special report identifies the role that food production can play in driving growth and suggests specific policy changes that could unlock growth in the poultry and horticulture markets. These changes could boost annual output by £1.3bn and create up to 60,000 new jobs.

Prepare for HFSS changes

Next week (01 October), new rules will limit or ban volume promotions (e.g. “buy one, get one free”) on HFSS products in England with the objective of improving the food environment, leading to healthier consumer choices.

See our article – HFSS changes: What to prepare for

Book to attend our Evaluation of HFSS impact webinar on 02 October here

Taxes and benefits narrow UK Income Gap in 2024

UK taxes and benefits narrowed income inequality in 2024, cutting the richest-to-poorest income gap. ONS data shows that before taxes and benefits, the richest fifth of households had income 12 times higher than the poorest fifth but, after redistribution, this difference fell to 3 times higher. Median income rose to £41.9k post-tax, but remains 7% below 2021, keeping food demand depressed. Over half of households received more in benefits than they paid in taxes.

IGD opinion

The latest ONS data highlights the political weight of tax and benefit policy. With public finances under pressure, the government is exploring ways to raise revenue. Since most taxes are paid by individuals, not corporations, consumers will bear the brunt of any changes.

Calls for higher taxes on the wealthiest have gained traction, but redistribution is already significant. While there may be scope for the wealthy to contribute more, their departure from the UK would be costly: those earning over £200k per year or holding assets above £2m make up just 1% of the population but contribute around 25% of personal tax receipts.

Replacing one high earner would require many new lower-income taxpayers. As the Chancellor prepares the next Budget, a careful balance must be struck between fiscal sustainability and economic resilience.