Bulletin: General election's impact on food industry

General election

The Prime Minister has announced that there will be a general election on Thursday 4 July, surprising some commentators. Parliament will be dissolved on Thursday 30 May. The government now enters a pre-election period, known as ‘purdah’, which restricts ministerial and departmental activity during campaigning.

Better economic news

The election announcement coincides with improved economic news:

• Lower inflation - New ONS data shows that “all items” inflation declined from 3.2% to 2.3% in April 2024, using the CPI method. This is the lowest level in almost three years. A key reason for lower inflation was falling costs for household energy and lower motor fuel prices

• Lower food inflation - Food price inflation declined again from 4.0% to 2.9% in April. This remains a little below IGD’s most recent forecast. The biggest contribution to this slowdown in food and drink inflation came from a combination of bread and cereals, meat, dairy products, vegetables, and soft drinks

• Better economic outlook - The International Monetary Fund has issued an update on the UK economic outlook. This includes an upgrade to the growth forecast in 2024 to 0.7% compared to the previous 0.5% forecast and a forecast of 1.5% growth in 2025

• Higher consumer confidence - IGD’s Shopper Confidence Index increased to 3 in April 2024 compared to -1 last December. ShopperVista subscribers can see more details here.

• Higher business confidence – In its latest State of Industry report Q1 2024, the Food and Drink Federation has reported that business confidence increased to its highest level since FDF began tracking it.

Viewpoint - what this means

• Increased certainty - Strategic uncertainty is a key issue for food businesses and may be holding back big investment decisions. We knew an election was coming at some point in 2024, and so the date announcement does not, in itself, add to uncertainty – if anything, it may reduce it a bit.

• Stalled policy - Ahead of Parliament being prorogued, the final bills of this parliamentary term are being passed through with cross-party support.  It is likely that the smoke-free generation bill will not be passed in this parliamentary term. The “purdah” rules will prevent government from announcing anything new.

• Policy clues - The party manifestos are the next big thing to watch out for. However, given the relatively poor state of the public finances, we would not expect major new spending programmes. There has been little change over recent months in the positions of the Conservative and Labour parties towards the food and consumer goods industry and in the run-up to an election, the industry is unlikely to gain significant political traction.

• An opportunity to influence – Following the election there is likely to be an acceleration of policy progress that will require businesses to respond. There is an opportunity over the next few weeks and months for stakeholders across the whole system to come together, and speak with a single voice to demonstrate the value the system creates, setting out our collective asks of a new government.