Bulletin: Overcoming the growth challenge

Overcoming the growth challenge

UK economic growth remained very subdued in Q2 2025. In real terms, excluding inflation effects, GDP grew by 0.3% quarter-on-quarter, suggesting a slowdown from Q1, when growth was 0.7%. Real GDP growth per capita was only 0.2%, so around one-third of economic growth came from population expansion, not increasing productivity.

The Chancellor, in her speech to the Labour Party Conference, noted that lack of growth over a long period has left the UK economy smaller than it might be and households poorer. She underlined the government’s commitment to growth and its readiness to take practical steps, such as legislative change to ensure that infrastructure investment benefits British businesses.

Read our latest article Government action can unlock £billions from food system.

Download the latest Viewpoint Special report Driving Growth Through A Thriving Food System, which explores the food system’s potential to support economic growth. It also suggests policy measures which might support expansion, especially in horticulture and poultry.

IGD opinion

ONS suggests that some of the slowdown in GDP may be due to planned export transactions being brought forward from Q2 to Q1 to avoid increasing international tariffs. Close examination of the data shows that export activity stepped up slightly in Q1 and then down again in Q2, so there may be truth in this.

Looking past this distorting factor, it is obvious that the UK economy is not in a healthy state. Most manufacturing sectors contracted slightly in Q2, including food and drink production. Shopper demand at retail also fell a little, although accommodation and foodservice grew.

The Chancellor did not offer any hints on what the forthcoming Budget might contain, although she emphasised the need to manage finances tightly and to make tough decisions.

The government remains focused on fixing economic “fundamentals” (i.e. transport and energy issues) and delivering sustained economic growth.

£2.6bn potential climate change cost to food system

A new IGD report, A Climate risk assessment for the UK food system, warns that maintaining business as usual exposes the UK to significant inflation, with additional costs of £2.6bn, equivalent to over 14.7% of annual food commodity costs.

This climate risk model in the report and the assessment from it, is designed to help business leaders and policymakers prioritise where to invest, where to collaborate and where policy can unlock progress.

Download the climate risk report.

Framework for population diet change

IGD has launched a new framework to support population-level diet change, identifying seven practical levers that businesses can embed into strategy & their organisation to drive diet change. The levers include: Value casing, Business integration, Data, Supply chain, Innovation, Consumer behaviour and Policy & Sector alignment. The framework is supported by real-world case studies.

Download the Framework for population diet change report here.

Youth guarantee

In her 2025 Labour Party Conference speech, the Chancellor pledged robust support for young adults through the Youth Guarantee. This initiative ensures access to education or job assistance, with paid placements for those unemployed over 18 months and penalties for non-participation.

IGD opinion

It is not clear how job placements will be secured but, given the scale of the food and drink system and the number of vacancies, many are likely to be with food and drink businesses. IGD has been working with young adults for more than 10 years, helping them to make the transition from school to employment.

Windsor Framework

Defra is running an online survey to understand business experiences of the Windsor Framework. This survey is in the final few days, but there is still time to respond. Deadline for completion is 6 October and completion should take less than 20 minutes.