Economics bulletin 31 March

Date : 30 March 2023

Your overview of economic and policy news with a focus on the food and consumer goods industry. Featuring the latest developments and guidance on the rising cost of living, disruptions to supply chains, the Ukraine crisis, labour shortages, policy developments and adapting to a new relationship with the EU.

Food price inflation predictions

The Chief Executive of the British Retail Consortium has stated that “shop price inflation has yet to peak” and that “food prices will likely ease in the coming months, particularly as we enter the growing season.” Recent food inflation rises are being partly driven by the high manufacturing costs of sugary snacks.

Last week, the ONS reported that food inflation remains in-line with IGD’s latest forecast. We predict that food inflation will peak between 17% and 19% in Q1 2023 and fade to around 8% by the year end.

Changes to the Deposit Return Scheme?

Humza Yousaf, Scotland’s newly elected First Minister stated during the leadership campaign that “we will exclude small businesses for the first year of operation” of the Deposit Return Scheme. The Scottish Deposit Return Scheme is due to launch in August.Businesses are encouraged to register online here.

Navigating the changing policy landscape remains critical for businesses in our industry. Register your place here, to hear our next Viewpoint webinar: Time to plan for a weak recovery? on April 20th.

Green Finance Strategy

The Government has launched an update to its Green Finance Strategy alongside a new energy strategy.The strategies are designed to mobilise green investment, scale up renewable energy technologies and accelerate the UK economy towards Net-Zero.

The Green Finance Strategy includes a third phase of the Industrial Energy Transformation Fund, worth £185m, due to launch in 2024. The fund provides grant funding to UK businesses for energy efficiency and decarbonisation projects.

Energy Bills Discount Scheme

The Energy Bills Relief Scheme will be replaced by the Energy Bills Discount Scheme on 1st April 2023. The Energy Bills Discount scheme provides businesses, public sector organisations and voluntary bodies with automatic discounts on the unit price of gas and electricity to 31st March 2024. The level of support offered will be considerably lower than the previous Energy Bill Relief Scheme.

A number of food and drink manufacturers are included in the Energy and Trade Intensive Industries Scheme, receiving a greater level of support.

See here to read our full summary of the Energy Bills Discount Scheme.

New Trade Deal

The UK will join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The CPTPP is a free trade area of 11 countries including Canada, Australia and Japan.

Joining the trading bloc will give a number of UK food and drink products including cheese, chocolate and spirits tariff-free access to these markets. It is estimated that being a member of the bloc will boost GDP by 0.08%.

The Windsor Framework

The UK and EU have formally adopted the Windsor Framework, following a successful vote in parliament where MPs supported the legislation. Work can now begin in the UK and EU to implement the framework. The legislative process is expected to take until the autumn. 

For further insight, please see here.

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