Escaping 'Japan syndrome': The role of the food system

Growing, but barely

The UK economy grew in early 2024, but slowly when compared to the pre-Covid rate. The Bank of England anticipates that growth will stay weak until at least mid-2027. There is a similar weakness across much of Europe.

The UK’s new Labour government has been clear that it hopes to fund its spending plans through the higher tax receipts that would (hopefully) come through better economic performance. However, economic revival is not certain.

Japan, for example, has struggled to recover from the economic crisis of the early 1990s, despite enormous policy efforts. It has now seen decades of stagnation, whilst its neighbours have moved ahead.

The UK shares many issues faced by Japan including an ageing population, high debt and labour shortage. There is a significant risk that the UK might follow a similar path and fall into “Japan Syndrome”.

Like Japan, the UK does not exist in isolation - it fits into a global system and, whilst the UK is drifting, other nations are growing and developing fast. The longer the UK languishes, the harder recovery will be.

The major consequence of weak economic growth is flatlining prosperity – household income growth slowed abruptly in around 2010 and has remained slow ever since. This makes it hard for businesses to thrive.

The food system has faced a lot of challenges in recent years but, looming behind them all, is weak economic growth. A thriving food system is hard to envisage if the overall economy is not doing well.

The recent King’s Speech lays out initial legislative moves in a wider government plan to create sustained recovery, with new bills covering infrastructure, planning, skills and digital resilience.

The Cyber Security & Resilience Bill may be especially timely, in light of the recent global IT problems caused by a software update. IGD recognised the vulnerability of the food system in its free resilience report.

The role of the food system

Interactions between the food system and the overall economy work in both directions of course. The economy affects food system outcomes and vice versa.

In addition to the vital role of feeding the population, the food system is a major national economic asset.  It employs about 13% of workers in direct roles and contributes about 6% to national wealth generation.

A strong, growing food system can clearly play a role in driving the UK economy forward, helping to deliver the new government’s overall aims and escaping from economic malaise.

The previous government chose to focus policy on a few “key” industries: creative activities, advanced manufacturing, green industries, digital technology, AI and biotech - a group which notably excluded food and drink (Spring Statement 2024, para 4.38).

Whilst it makes sense to focus effort, rather than dispersing it widely, this limited list may have missed a trick.

In terms of national wealth generation, the food system is comparable in importance to creative activities.

The new government has now recognised food security as a national security priority (manifesto, page 59), which is positive.

However, having a priority is not the same as having a sound plan and putting it into effect. We await further details on exactly what the government has in mind.

This is the time for businesses in the food system to engage with the new government and to play a role in forming policy, which will make the system a driver of growth and a contributor to national resilience.

IGD wrote to the major parties and senior officials just before the election, outlining five suggested priorities for the future development of the food system:

• Building resilience

• Supporting sustainable agriculture

• Accelerating the transition to Net Zero

• Building a future-fit workforce

• Securing a healthier future

This is the place to start.