Bulletin: Civil disorder and US recession threat

Civil disorder

The last week has seen violent disorder at multiple locations across the UK with some retail and foodservice businesses attacked, whilst others have been closed as a precaution.

On Wednesday, the British Retail Consortium (BRC) hosted a meeting for industry representatives and government officials.

Helen Dickinson, head of the BRC has called for robust policing, stating:"The full force of the law should be brought to bear on those individuals who are committing criminal damage and theft against retailers and the communities they are part of."

Economic outlook

Key economic findings from IGD’s latest Viewpoint report include:

• UK GDP growth is forecast to be +0.5% in 2024 rising to +1.5-2.0% by 2027

• Food drink inflation is expected to be 1.1%-3.1% in 2025

• High levels of public debt, coupled with self-imposed fiscal rules, limit short-term options for the Chancellor

• There is little room to boost household prosperity quickly

Download the free Viewpoint report.

IGD opinion

With inflation falling to more normal levels, weak volume growth is now exposed. Businesses must work together to restart volume growth and maintain it into the future.

US recession threat

Global equity markets declined this week on increasing fears that the US economy could enter a recession. Goldman Sachs economists raised the risk of a US recession to 25% from 15%. This follows news of a slowdown in US jobs growth.

IGD opinion

The abrupt correction in market values is not uniform – much of it has been concentrated on technology stocks, including big, established players such as Amazon and Apple, which may have been over-valued and are therefore vulnerable.

The US economy is fairly robust, however, and the judgement Goldman Sachs suggests that growth is still much more likely than recession. This is one reason why the Federal Reserve has been so cautious when setting interest rates.

It might be argued that the slight weakening of the US economy is a sign that monetary policy is working. The whole point of careful monetary control is to hold demand down and therefore to moderate price change.

For food system businesses, the key question is whether recent events will change this policy and, if so, how the Bank of England’s Monetary Policy Committee might be influenced by this. IGD’s shopper research shows that many households in the UK are under pressure from housing costs and debt repayment and would likely benefit from faster-than-expected rate reductions.

Quality focus

IGD’s Shopper Confidence Index for July 2024 shows that shopper confidence has remained stable. Fewer now believe that food prices will get more expensive in the next year. More now believe they will focus on quality rather than saving money when food and grocery shopping in the year ahead.

ShopperVista subscribers can access the latest report.

Sustainable Farming Incentive

The government has announced that the first Sustainable Farming Incentive agreements for 2024 are now live. Farming Minister Daniel Zeichner said “This is the first step to increase farmer confidence, as part of our new deal for farmers, to boost Britain’s food security, restore nature and support rural economic growth.”

The Rural Payments Agency has also confirmed that 98% of eligible farmers have received their first instalment of the new delinked payments. These are intended to provide financial support as Defra encourages farmers and land managers to enter the Environmental Land Management schemes.