Bulletin: Andy Burnham outlines economic plans

Andy Burnham outlines economic plans 

Andy Burnham, newly-elected Labour MP for Makerfield and likely next Prime Minister, has outlined his ideas for reforming government and driving economic growth. Key themes in the speech included extending devolution and developing place-based economic strategies built around industrial “clusters”. 

Read the full article – What Andy Burnham’s plan means for the food industry 

IGD opinion 

The most notable part of the speech for food businesses was a point only touched on in passing. Agri-food was recognised as a national asset, which must be protected and developed in order to boost national resilience. Food businesses are likely to welcome this, although detail on exactly what might be involved was not developed. 

However, taking a wider view, it is not clear how devolving more decision-making power to regions or cities will actually result in higher governmental efficiency or better economic performance. So far, there is little evidence of current devolution delivering better performance for Northern Ireland, Scotland or Wales, even after more than 20 years. 

Why food prices are unlikely to fall 

Food inflation has eased from recent highs, but a broad and sustained fall in food prices remains unlikely. IGD forecasts food and drink inflation of 3.3 to 4.3% in 2026, reflecting ongoing structural pressures across the food system.  

Key insights: 

• Food and drink inflation is forecast at 3.3–4.3% in 2026.  

• Many inflationary pressures are structural rather than temporary, meaning costs are unlikely to fall significantly. 

• History shows that periods of sustained food price declines are rare, with only one notable recent example between 2014 and 2016.  

• Productivity, efficiency and resilience are likely to be the most effective ways to support affordability and growth.  

Read the full article – Why food prices are unlikely to fall

IGD opinion

For food businesses, the challenge is less about whether prices will fall and more about how to adapt to a world of structurally higher costs while maintaining affordability for shoppers.  

Energy prices

01 July saw an increase in the Domestic Energy Price Cap. Maximum electricity unit prices rose by 6% and maximum gas unit prices by 28%, reflecting changes in wholesale markets. 

This means that a typical domestic bill will rise by about 13% to £1,862 per year. (Note that the definition of a “typical” household is under review, due to changing consumption patterns). 

Separately, energy analysts Cornwall Insights has forecast that there will be a small reduction in the Price Cap when it is renewed in October 2026.  

Economic output stronger in Q1

Revised data from ONS shows that quarter-on-quarter GDP growth in Q1 2026 was 0.6% in real terms (no change from the provisional reading). Growth was 0.9% when measured against Q1 2025. 
 
This represents a welcome improvement after fairly lacklustre growth over Q2-Q4 2025, although data would not reflect the impact (if any) of conflict in the Persian Gulf. 

“Death Day” dawns

01 July marked “Death Day” in England and Wales, the point at which deaths began to exceed births, turning “natural” population change negative for the first time since 1976. 

This is a notable demographic event, but the UK is not unusual in this regard. Taking a global view, almost all countries now have a fertility rate below the “replacement” level of about 2.1 babies per woman over her lifetime. This means that, unless something dramatic happens, almost all countries are now set for demographic contraction at some point in future. 

Despite the collapse of birthrates in the UK, net immigration will remain positive right up to end of century, compensating for natural factors. In next 10 years alone, we will need to find food to feed another 2m people. Total population is not expected to stabilise until mid century at least, according to ONS projections. 

Geopolitical briefing

Russian refineries attacked

Ukraine has delivered a major series of drone strikes against Russian oil and gas facilities. This has resulted in motor fuel shortages across the country. A Kremlin spokesman confirmed that Russia plans to import fuel in order to address this. 

US and Iran exchange fire

An Iranian weapon system has struck a ship in the Strait of Hormuz, provoking a new series of exchanges between the US and Iran. For now, however, the ceasefire seems to have resumed. Shipping through the Strait has picked up a little since the ceasefire was agreed in mid June, but remains well below typical pre-conflict levels.