Bulletin: Geopolitics clouds 2026 outlook

Geopolitical unpredictability dominates 2026 outlook

2026 begins with heightened global instability with the US action in Venezuela and renewed interest in acquiring Greenland, signalling a turbulent geopolitical landscape. In the UK, food businesses must brace for political and regulatory changes, persistent food inflation, and fragile consumer confidence also shaping the year ahead.

See our latest article Six for 2026: What food businesses must prepare for.

IGD opinion

Given the heightened geopolitical unpredictability, the UK food system – and the wider economy – remains acutely vulnerable to external shocks, particularly those driven by geopolitical and climate factors. IGD’s research highlights significant supply chain risks, with recent analysis quantifying the financial impact of climate change on key food commodities under multiple scenarios. Strengthening resilience will require substantial investment, but the cost of inaction or delay would be far greater – both economically and strategically.

HFSS advertising ban

From 05 January advertising restrictions for HFSS food and drinks came into force across England, Wales, Scotland and Northern Ireland.

The restrictions prohibit the advertising of HFSS products on television between 5:30am and 9pm, with a total ban online.

See our latest article - HFSS advertising ban comes into force.

IGD opinion

The increased regulations on HFSS advertising mark a clear shift in how food and drink brands will need to engage with shoppers. Strategic planning is now essential, with greater emphasis on reformulation, healthier variants and brand-building that doesn’t rely on paid-for product advertising.

Measures to support British farming

At the Oxford Farming Conference, Environment Secretary Emma Reynolds pledged partnership, stability and growth for UK farmers. Key announcements, some of which were restated, included:

• Inheritance tax reform: agricultural and business property relief threshold raised from £1m to £2.5m.

• Sector growth plans: Starting with horticulture and poultry to boost domestic production.

• Farmer Collaboration Fund of £30m over three years

• SFI upgrade: Simpler, fairer Sustainable Farming Incentive with two application windows in 2026.

• Commitment to resilience: Support for innovation and climate-smart farming.

IGD opinion

The commitment to produce sector growth plans starting with horticulture and poultry is most welcome. The recent Viewpoint Special report Driving Growth Through A Thriving Food System, explores the food system’s potential to support good economic growth. It also suggests policy measures which might support expansion, especially in horticulture and poultry. Businesses are encouraged to input into the government consultation on a revised National Planning Policy Framework which could help to unlock some of these growth opportunities.

Further development of the SFI is a key undertaking. Government payments to farmers are less generous than previously, but many still rely on these payments to remain financially viable. Design and implementation of this system have a powerful impact on farm decision making and therefore on UK food production.

Cost of living focus

The Prime Minister has insisted that in 2026 “more people will begin to feel positive change in your bills.” This includes:

• Freezing rail fares, prescription charges and fuel duty

• Cutting energy bills by £150

• Increases to the minimum wage

• Cuts to the cost of childcare

IGD opinion

Although the measures outlined above are positive, our assessment of the 2025 Budget’s impact on the food system indicates that tax increases will further constrain household budgets, intensifying pressure on already cautious consumers. The freezing of income tax thresholds, combined with pension reforms, will erode disposable income.

In 2026 we expect living standards will remain under pressure, with real household disposable income per person expected to stay below pre-pandemic levels.

Proposed changes to drink driving limits

The government has announced an updated road safety strategy with a plan to reduce deaths and serious injuries on Britain’s roads by 65% by 2035.

This includes a consultation on lowering the alcohol limit for driving.  The Department for Transport has proposed lowering the alcohol limit for novice drivers and those in their two-year probation period from 80mg per 100ml of blood to around 20mg. For all other motorists, the limit would be reduced to approximately 50mg.

Business rates rethink?

Following concern raised by the hospitality sector around the impact of changes to business rates, The Prime Minister has stated that the government was in talks with the industry to see "what further support and action we can take". 

IGD opinion

The impact of Business rate changes on food price inflation forecasts should not be underestimated. Download our Viewpoint report, Food inflation to persist as taxes bite, to see more details.