Bulletin: Stagnant growth and Northern Irish trade

Food inflation to remain higher

IGD is slightly more pessimistic than previously about the outlook for food and drink inflation in the UK.

Our new forecast shows that food inflation will not turn negative until at least 2028, estimating that food and drink inflation will sit at between 0.2% to 2.2% at the end of 2024, compared to 8% currently.

See the full details of our food inflation forecasts in our latest Viewpoint report: As food inflation falls, what’s in store for 2024?

Northern Ireland trade

An agreement has been reached between the Democratic Unionist Party and the government that will result in the restoring of power sharing in Northern Ireland (NI) and no routine checks on goods crossing from Great Britain to Northern Ireland. The plan guarantees “Northern Ireland’s unfettered access to the UK’s internal market”.

IGD Viewpoint: Experience shows that much depends on the detail of legislation and systems. At this point, we do not know exactly what changes will occur, but any measures intended to assist the movement of food from GB to NI is probably positive for businesses and consumers.

Growth to remain stagnant

The Bank of England Monetary Policy Committee has voted to keep interest rates unchanged at 5.25%. The UK’s economic growth is expected to remain sluggish, growing at around 0.1% per quarter over 2024. The expectation is that interest rates will remain high as the MPC 'need confidence' that inflation is moving back to target. CPI inflation is expected to continue to slow over the first half of 2024, eventually reaching the target rate of 2% before moving slightly upwards again in the second half, ending the year at about 2.7%.

The IMF recently forecasted that UK economic growth will remain slow, predicting that growth will be 0.6% in 2024 and 1.5% in 2025. Additionally, The IMF advised the government against discretionary tax cuts as part of the Budget on 6 March.

You can read all our predictions for the UK economy, consumer sentiment and the policy landscape in our latest Viewpoint report.

IGD Viewpoint: UK recovery from the pandemic is now largely in the past rather than the short to mid-term future. IGD has forecast that UK economic growth is expected to stall in the years ahead as consumers continue to face economic pressures.

Target operating model

The Target Operating Model (TOM) was implemented on 31 January 2024, with the requirement of health certification on imports of medium and high risk animal and plant products.

The next phase of changes is much more substantial and will be implemented on 30 April 2024. This will see checks commencing on medium and high risk animal and plant products from the EU.

Additionally, a selection of fruit and vegetable species have been reclassified from low to medium risk products. However, they have been granted a temporary easement to remain as low risk products until 31 October 2024. Checks and pre-notification requirements, in line with other medium risk animal and plant products will commence on 31 October 2024.

National Apprenticeship week

National Apprenticeship Week begins next week, providing an opportunity for the education and skills sector to showcase the positive impact apprentices make to businesses and the wider economy.

This National Apprenticeship Week, IGD is calling on food companies to continue pledging support for our employability programmes in the run-up to IGD spearheading an industry-wide summer campaign to raise the appeal of working in the food sector.

If you work for a food or consumer goods business and would like your experts to participate in raising awareness of sector attractiveness, please contact [email protected].