The Bank of England recently downgraded its economic growth forecasts for 2024. With unemployment nudging up, interest rates remaining relatively high and household budgets tight, there is significant danger that economic performance will flatline. Despite this, there are still opportunities for growth for food and consumer goods businesses.
The good news is that after a prolonged period of rising prices, inflation appears to be fading slowly. Attention is now turning to economic growth and recovery. However, real growth appears far off, particularly if the bleak forecasts by the Bank of England are anything to go by.
The Bank of England has downgraded its economic growth forecasts for 2024 to 0% from 0.1% in August. High interest rates are having their desired effect; inflation is forecast to fall back to the 2% target by Q4 2025, however, this is six months longer than previously forecast. Unemployment is forecast to rise to 4.7% by the end of next year (up from a forecast of 4.3% in Q4 2023).
The Monetary Policy Committee has voted to hold interest rates at 5.25%. Bank of England governor Andrew Bailey commented that “it is much too early to be thinking about rate cuts” and that inflation remains “too high”.
Opportunities for growth
However, this does not mean there is no opportunity for growth. Wage growth has begun to outpace inflation, meaning that the real value of wages is rising once more. With a general election expected to take place in 2024, the government will be keen to focus on economic growth.
We have identified key growth opportunities for the food and consumer goods industry in both the retail and eating out markets. However, they key challenge will be to rebuild margin whilst also delivering value for money to consumers. Businesses will also be keen to focus on value added benefits such as ethics, innovation, provenance and quality as we approach the key Christmas trading period.
The role of the food system
With a presence in every community across the breadth of the country, the true scale and economic value of the food and consumer goods industry is often overlooked. The food and consumer goods industry will need to play its part and provide opportunities for growth across the UK.
To help you plan for 2024, register for our upcoming Viewpoint webinar on 16 November where we will discuss the economic landscape, changing consumer sentiment and government policy. Some of the key issues we will explore include:
- What is the outlook for food inflation?
- Will there be a recession?
- Will people be spending more this Christmas?
- Which businesses are best placed to lead the recovery?
- What can the food and consumer goods industry do to drive growth?
- What changes to government policy are going to have the most impact on food businesses?
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