Bulletin: Tax rises to impact demand

Budget 2025: Key signals from the Chancellor

Chancellor Rachel Reeves outlined priorities for the upcoming Budget, pledging to come up with a "Budget for growth with fairness at its heart." A key focus will be on NHS investment, reducing national debt, and easing cost-of-living pressures. She highlighted challenges including inflation, global borrowing costs, and productivity gaps. The speech emphasised reform, efficiency, and long-term growth, with a pledge to act in the national interest.

The Chancellor refused to rule out tax increases saying, "each of us must do our bit".

IGD opinion

Productivity is the key issue. UK productivity has been flat lining since the Credit Crunch, and it wasn’t great before that. Low productivity growth has limited tax receipts and hamstrung attempts to bring national debt under control.

Unfortunately, productivity growth in some parts of the food system has also been disappointing. In this case, it is not only an economic issue but a welfare issue as well, since the food system must grow productivity to feed the nation. There are measures that can be taken, however, and IGD has identified specific policy levers which might unlock greater productivity and growth, especially in poultry and horticulture. 

Lower interest rates to come?

The Bank of England Monetary Policy Committee has held interest rates at 4%, citing persistent inflation despite a sharp fall from its peak. While CPI inflation is believed to have peaked, future rate cuts depend on continued progress.

IGD opinion

The narrow 5–4 vote signals growing pressure to ease rates. The MPC highlights household spending and weakening labour demand as key concerns. With tax rises expected in the upcoming budget, rate cuts may be used to cushion the impact on consumers.

New framework to support sustainability progress in the food supply chain

IGD and six major manufacturers have launched a new Food Supply Chain Sustainability Framework and Guidance to help businesses work more effectively towards sustainability goals.

• Supporting supplier self-assessment across seven priority areas

• Building on IGD’s Net Zero Transition Plan

• Aiming to streamline engagement and accelerate joint progress

The Framework offers practical tools for commercial planning and sector-wide collaboration.

The new Food Supply Chain Sustainability Framework and Guidance is available here.

Net Zero Transition Plan update

A new progress report marks one year since the launch of IGD’s Net Zero Transition Plan, shifting focus from ambition to action. The report highlights:

• The food system contributes a third of global greenhouse gas emissions
• Transitioning to net zero is vital for health, climate, and industry resilience
• The report shares updates, case studies, and commentaries from across the sector that support our collective progress towards net zero
• WRAP will publish new emissions data and calls to action in December

Further submissions of case studies are welcomed to support collective progress.

The Net Zero Transition Plan Progress Report is available here.

Green careers week

IGD is leading efforts to tackle labour shortages and build a resilient food system by promoting green careers. During Green Careers Week, IGD is hosting workshops to raise awareness of sustainable roles and STEM pathways.

See our latest article: Green jobs: Powering the food industry’s future

Ill health hits UK workforce hard

Sir Charles Mayfield, former Chairman of the John Lewis Partnership has led production of a new report on ill-health and employment, called Keep Britain Working. This has revealed:

• One in five working-age adults are now out of the labour force

• Ill-health-related inactivity has risen by 800,000 since 2019

• Employers lose £85bn annually from sickness and lost productivity

• UK disability employment rate lags behind OECD peers at 53%

• New employer-led Vanguards aim to improve workplace health and inclusion

A three-year partnership will use employer-led Vanguards to test solutions to these issues.

IGD opinion

Economic inactivity in the UK is rising, with levels higher post-Covid than before. Young adults with mental health challenges are now key contributors to this shift. Poor mental health strongly correlates with unemployment and low earnings, risking long-term disadvantage. Employers must prepare to address these issues in both hiring and workplace support.

Avian flu

There are mandatory housing measures in place in Great Britain (England, Scotland and Wales). This applies where:

• You have more than 50 birds

• You have less than 50 birds, but you sell or give away their eggs, poultry products or live birds

EPR update

The UK government has formally laid the full Extended Producer Responsibility (pEPR) regulations for packaging before Parliament.

• Sets out obligations for producers to cover packaging waste costs

• Aims to drive circular economy outcomes

• Applications for PRO status are now open, with suitability to be assessed based on industry support, value for money and past performance in similar roles.

Unlocking business - call for evidence

The government has invited businesses to identify outdated or burdensome regulations that hinder growth. With the aim to cut administrative costs by 25%, the initiative seeks input on rules that delay innovation or impose unnecessary costs. Businesses have until 16 December 2025 to respond.

Scotland HFSS update

New regulations in Scotland will restrict promotions and placement of high fat, sugar, and salt (HFSS) foods in stores and online.

• Aims to reduce obesity and diet-related illness

• Applies to businesses with 50+ employees

• Exemptions for small and specialist retailers

The policy aligns with England and Wales to support healthier choices.