New government, new direction? Role of UK food system in delivering growth

Press release

As the new Labour government inherits a difficult economy, IGD’s economics experts have released a Viewpoint report, ‘New government, new direction?’ unpacking the UK food system’s role in delivering growth and employment, alongside an insightful inflation forecast.

While the government grapples with how policy can boost growth, the report highlights the fact that food and consumer goods account for 7% of the UK economy and that our UK food system constitutes the largest private sector employer. The implications are that UK food and consumer goods can both continue to grow in value and increase household wealth and spending.

However, the report shows that the long-term view is not so simple, as the rise in minimum wage will be keenly felt by retailers who are already contending with increased costs and poor volume sales.

Although the economy has moved into real-terms growth, food and drink inflation is expected to remain positive. According to the forecast, it is expected to be at 0.1% in quarter three of this year and will gradually rise to between 1% and 3% during 2025, creating a plateaux effect. IGD expects that the downward leg of inflation is nearly over.

Chief Economist at IGD, James Walton said: ‘The UK will not return to a pre-crisis economy for some time. But the food system has a huge role to play in supporting economic resilience, growing GDP and providing jobs in our local communities.’

Meanwhile, IGD’s ShopperVista data shows that the income divide between high and low-earning households is still a major factor affecting shopper confidence. Of adults on a lower income only 29% are expecting to be better off in the year ahead compared to 59% of those on higher incomes. Based on the survey, 62% of all adults are expecting food prices will be more expensive in the year ahead and only 13% expect food prices to fall over the coming year.*

Added to this, a recent poll undertaken by IGD reveals that the current mood among shoppers is tentative post-election, with only a modest view that financial conditions will improve.

Naomi Kissman, Social Impact Director at IGD said: ‘Our food system is critical to our UK economy and to driving growth. However, as we experience greater impacts of a changing climate and ongoing geo-political uncertainty, it is also facing a period of far greater risk.

Therefore, it’s encouraging to hear the new government is prioritising boosting food security. There is a huge opportunity for businesses and policymakers to work in partnership to deliver a more resilient, sustainable and economically successful UK food system.’

Read IGD’s Economic Viewpoint: ‘New Government, New Direction?’ 
For interviews with our spokespeople, please contact: [email protected]

Notes to editors:
* Source: IGD ShopperVista, June 2024, base size 999 adults aged 18+
1.    IGD is an organisation of two interconnected communities. The profits from Commercial Insight are reinvested into Social Impact, which together work to drive change that makes a tangible difference for society, business and the individual. 
2.    Social Impact from IGD is delivered in four key areas:
a.    People – focussed on giving young people opportunities to develop their employability and life skills, and on building the knowledge and capability of food and consumer goods industry colleagues, to foster an inclusive and productive workforce;
b.    Health – nutrition experts use the latest research and behavioural science to develop practical tools that help the whole industry. IGD is collaborating with and inspiring companies to adopt best practice and implement change;
c.    Sustainability – focused on mobilising the industry to tackle climate change, reduce food waste, increase food surplus redistribution, develop sustainable packaging systems and accelerate the industry’s progress towards Net Zero; 
d.    Economics – supporting better strategic planning and decision making, for the benefit of consumers, through economic analysis and engagement with policy makers.
3.    Commercial Insight is delivered through six core areas:
a.    Retail Analysis – providing trusted data and insight, straight from the heart of retail;
b.    ShopperVista – providing insight that creates the foundation for progressive shopper and category thinking;
c.    Events – providing compelling experiences that connect people and ideas together;
d.    MarketTrack – the most trusted, rigorous market read in the retail sector;
e.    Supply Chain Analysis – providing answers and unlocking potential;
f.    Solutions – personalised solutions that address the critical customer and commercial challenges.
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