Bulletin: Labour, forecasts and no recession

Labour review response

IGD’s recent free Viewpoint report, Striving for growth, highlighted the challenges and opportunities with regards to labour and skills in the food supply chain.

The government has now responded to the recommendations made by the independent review into labour shortages in the food supply chain. Details include:

• Increased support for agri-innovation by up to £50m by launching a programme to automate packhouses in horticulture

• Fast-tracking research and development of robotic crop harvesters

• Extension of the Seasonal Worker visa route from 2025 to 2029. In 2025, there will be 43,000 visas available for horticulture and 2,000 visas for poultry

• A programme of work led by the Food and Drink Sector Council and Defra to improve sector attractiveness

• The earnings threshold for those arriving on the Skilled Workers visa route increases by 48% from 4 April 2024

Steve Barclay, Secretary of State for Environment, Food and Rural Affairs stated, “Visa allocations must fall as the benefits materialise, and we will work with the sector to ensure this happens as quickly as possible.”

Download our Viewpoint report and 1-page executive summary.

IGD Viewpoint
Changing negative perceptions of the food industry and boosting its appeal to both a prospective labour force and government is essential.

The Food and Drink Sector Council Workforce Sub Committee is developing an industry-wide campaign, spearheaded by IGD, to boost sector attractiveness. To understand how your business can get involved, please get in touch with [email protected].

No recession

The ONS has reported that GDP increased by 0.4% in March and has increased by 0.6% for the three months to March 2024. The UK economy is therefore no longer in recession. Growth was 0.4% when population change was accounted for – the first gain after seven consecutive quarters of per-capita decline.

IGD Viewpoint
Despite this positive news, future growth is expected to remain fairly weak. This poses fiscal challenges for the government. It also suggests that future consumer demand will be constrained including for food and groceries and eating out.

Economy forecast

The Bank of England has set out its outlook for the UK economy.

• CPI inflation is forecast to return to close to the 2% target in Q2 2024 before increasing to around 2.5% in Q3 and Q4 2024

• GDP to grow by 0.2% in Q2 2024

• Unemployment to increase from 4.3% in Q2 2024 to 4.6% in Q2 2025

Interest rates

The Bank of England has announced that interest rates will remain unchanged at 5.25%. This comes as inflation of 3.2% remains above the Bank’s 2% target.

IGD Viewpoint
There is an expectation that interest rates may be cut in the next few months as inflation falls further. However, the Bank of England and the European Central Bank have been careful to manage expectations, emphasising that rates will not be lowered until there is confidence that inflation is firmly under control.

New Scotland First Minister

John Swinney has taken up the role of Scotland’s First Minister. The full ministerial team is detailed here.