Bulletin: Faltering economy, growth and unemployment

GDP growth slows sharply

Latest ONS data shows that GDP grew by just 0.1% in Q3, down from 0.3% in Q2, signalling an economy losing momentum. Real GDP per head is estimated to have shown no growth in the latest quarter. The slowdown reflects weaker services and construction, a sharp fall in manufacturing, and cost pressures hitting investment and confidence.

IGD opinion

These figures are disappointing and point to an economy in the doldrums. With growth a top government priority, the food industry, the UK’s largest private sector employer, can play a pivotal role. IGD urges targeted government action in horticulture and poultry, where policy unlocks could release £5bn investment and create 60,000 jobs in the UK food system. See our recent Viewpoint report: Driving growth through a thriving food system.

Weakening labour market

New ONS data shows that the UK labour market continues to weaken, slowly but consistently. The headline unemployment figure for August was 5.0%, up from 4.3% a year before. This represents an increase of 282,000 in the number of people unemployed. The number of unfilled vacancies is also down year-on-year.

More positively, wages for those in work are up 4.6% year-on-year to £733 per week, slightly ahead of inflation, meaning that pay is still rising in “real terms”, although at least some of this will be accounted for by changes to the National Living Wage, which rose by 6.7% in April.

IGD opinion

Other sources also suggest a decline in labour demand and, therefore, general economic weakness.

The latest study by CPID shows that there has been a general weakening of employment intentions in the last 2-3 years, although employment intentions remain positive, at least in the private sector (i.e. more private sector employers expect to increase staffing than to reduce it). The latest monthly report from the Bank of England Decision Maker Panel also shows a reduction in employment intentions.

Both sources cover the economy as a whole, rather than the food and drink market specifically, but they do suggest an economy that is struggling. Likewise, both suggest that households are looking rather vulnerable – workers that lose or leave their jobs will struggle more to find a new one.

Bank data also shows that anticipated wage growth in the year ahead is also falling. In October, wages were expected to grow 3.7% down from 4.1% a year before. That said, historical data from this survey suggests that employers tend to anticipate lower wage increases than are actually achieved in practice.

Unfortunately, productivity growth in some parts of the food system has also been disappointing. In this case, it is not only an economic issue but a welfare issue as well, since the food system must grow productivity to feed the nation. There are measures that can be taken, however, and IGD has identified specific policy levers which might unlock greater productivity and growth, especially in poultry and horticulture.

Youth inactivity – uncovering the issue

With approximately one in eight young people aged 16 to 24 not in education, employment, or training (NEET), the government has announced that former Health Secretary Alan Milburn will lead an independent investigation into what’s behind rise in youth inactivity.

It will focus on:

• Causes of inactivity

• Barriers to employment

• Strategies to boost participation in education, training, and work

IGD opinion

Fifteen years ago, IGD launched Feeding Britain’s Future in response to similar challenges, and over the past decade this initiative has delivered significant impact, supporting over 130,000 young people through our employability programmes.

The review provides a good opportunity for the food sector and DWP to work together to create meaningful opportunities for young people and help address our industry’s workforce challenges.

Driving sustainability in the food system

IGD has published two key resources to support industry progress:

• Net Zero Transition Plan progress report – a summary of progress and case studies from across the food system.

• Food Supply Chain Sustainability Framework – practical guidance to embed environmental and social responsibility.

See our latest article, Understanding the Net Zero Transition Plan, to understand how these tools help businesses build resilient, sustainable supply chains.

Climate change and mental health

A new government report warns that climate change is not only an environmental challenge but a growing mental health risk. Rising temperatures, extreme weather, and uncertainty about the future are linked to anxiety, depression, and stress across the UK. The report calls for integrated health and climate strategies to build resilience and support vulnerable communities.