Bulletin: budget preview, growth forecast, health

The budget – more certainty?

Businesses in the food industry will be hoping that next week’s budget will help to provide greater certainty for 2025 planning.

The budget will set out a plan to deliver on its key mission of kickstarting economic growth whilst carefully managing expectations on how quickly the UK economy can be turned around.

Our next Viewpoint report, which launches on 14 November, will provide our analysis of the budget and predictions for the economy, consumer sentiment and policy in 2025.

Growth forecast

The International Monetary Fund (IMF) has revised its forecast for UK GDP growth in 2024, moving it from +0.7% in its July report to +1.1% in the latest edition. The forecast for 2025 of +1.5% remains unchanged for the moment.

IGD opinion

This is encouraging, but growth of 1.1% is less impressive when population growth of around 1.0% is accounted for - real growth per capita is likely to be roughly zero.

The IMF report provides some useful background on how the global position is evolving. There are signs of improvement, with inflation pressure fading.

Strategic risk remains very high, however, with the IMF pointing to the possible impacts of conflict, extreme weather and financial shocks.

The IMF also consider the need for governments across the world to address economic reform and fiscal issues but identifies the challenge of strong social resistance on the part of consumers.

It calls on governments to foster greater trust with consumers, via open policy-making and consultation.

Higher borrowing

UK Government public sector borrowing for September was £16.6 billion, £2.1 billion more than in September 2023 and the third highest September borrowing since monthly records began in January 1993. Public borrowing for the first six months of the financial year was £6.6bn more than forecast by the Office for Budget Responsibility (OBR).

This follows a recent report by the OBR which warned that the national debt was predicted to triple against the size of the economy over the next 50 years.

IGD opinion

The new data will add to pressure on the Chancellor and her team as they complete the October Budget. There appears little fiscal room to comfort taxpayers so the key objectives will be clarity and certainty, ending the speculation which has dominated the post-election period. Analysts are sure to pore over the Budget documents, looking for weaknesses and ambiguity.

The Chancellor will not only address taxpayers and the media but also the major investors that buy government debt. These are the people who decide how much the government will borrow and on what terms - they need to be kept "on-side" if the government is to borrow on affordable terms.

Food system and health

The House of Lords Food, Diet and Obesity Committee has issued a new report – Recipe for health: a plan to fix our broken food system. Recommendations include:

• Creation of a comprehensive and integrated National Food Strategy

• Make large food businesses report on the healthiness of their sales

• Introduce a salt and sugar reformulation tax on food manufacturers

• Give the Food Standards Agency (FSA) independent oversight of the food system

• Commission further research into ultra-processed foods (UPFs), foods high in fat, sugar and salt (HFSS) as well as the interventions that can reduce consumption of less healthy foods.

• Ban the advertising of less healthy food across all media by the end of this Parliament and review the Nutrient Profiling Model (NPM).

• Review schools’ food standards, availability of free school meals and the Healthy Start voucher scheme.

IGD research is cited in the recommendations around Healthy Start vouchers and in the evidence on UPFs.

Banning vapes

The government has confirmed that they plan to ban the sale of single-use vapes from 1 June 2025. Businesses will have until that date to sell any remaining stock. The ban will cover the UK, with Trading Standards enforcing the ban within each local area.

The aim is to “kick-start the push towards a circular economy and to curb the rise of young people taking up vaping.”

A Tobacco and Vapes Bill will be introduced which will also cover banning smoking in all outdoor public spaces and location restrictions on vaping use.