Bulletin: Growth, savings and skills boost

Restoring growth and volume

The UK economy continues to grow slowly compared to pre-pandemic rates. The Bank of England anticipates that growth will stay weak until at least mid-2027. The major consequence of weak economic growth is flatlining prosperity. This makes it hard for businesses to thrive.

A strong, growing food system can clearly play a role in driving the UK economy forward. This is the time for businesses in the food system to engage with the new government and to play a role in forming policy.

See our latest free Viewpoint report for details of the five priorities for the future development of the food system.

Skills boost

The government has announced the launch of Skills England to bring together key partners to meet the skills needs of the next decade across all regions. Richard Pennycook CBE, former chief executive of the Co-operative Group will be the interim Chair.

IGD opinion

This is welcome news. In our latest Viewpoint report, we identified that one of the five key strategic priorities for the UK food system is to build a future-fit workforce. This will involve navigating short-term labour issues and long-term skills gaps.

Every industry in the UK is likely to see this as an opportunity. It will now be key that the food industry comes together and collaborates with government on this to drive progress.

Saving vs spending

The latest data from ONS shows that the UK household saving ratio is rising again from 6.6% in Q2 2022 to 11.1% in Q1 2024, suggesting that consumers remain edgy and worried about the future. UK consumers have been reluctant to spend accumulated savings.

IGD opinion

Consumers are also allocating a higher proportion of spare cash to paying off existing loans, which - again - suggests a sense of worry. IGD's latest consumer research (see here for more details) shows that for 27% of consumers, the level of household debt is expected to impact how much is spent on food and grocery shopping in the next few months. This suggests that future consumer demand will be constrained including for food and groceries and eating out.

Increased budgeting

A new report from UK Finance shows that while the number of cash payments declined in 2023, the number of people mainly using cash in 2023 rose to 2.6% vs 1.7% in 2022. UK Finance's head of research Adrian Buckle said: "This is likely to be a reflection of the use of cash to manage a limited budget."

The report also showed that:

• Almost four out of ten (38 per cent) of all payments made in the UK during 2023 were contactless

• One-third of UK adults were using mobile contactless payments at least once a month

• Over the next decade, debit card payment volumes are forecast to continue to increase

• The number of cash payments is expected to continue the long-run declining trend, though the rate of decline is expected to slow

Better availability

Latest IGD consumer research this week shows just 43% of adults aged 18+ reported poorer availability of some food and groceries in-store or online recently. This has trended downwards and is now the lowest level recorded since first measured in 2021.

This compares with a high of 77% reporting poorer availability a year ago.