Bulletin: New PM, same fiscal pressures

New PM, same fiscal pressures 

For food businesses, the key question is not who becomes Prime Minister, but how an incoming government raises revenue when fiscal choices are increasingly constrained  

With no rival candidates to challenge him, Andy Burnham has become Labour Party leader on 17 July. Keir Starmer is expected to deliver his resignation as PM on the same day with Mr Burnham expected to form a government on 20 July. 

Mr Burnham has given away little about either his future government team or his policy ideas but has hinted that while commitments on personal taxation will remain, tax rises in other areas are possible. These could include higher business rates on distribution centres to fund lower rates for some retail and hospitality businesses. 

IGD opinion 

Given the enormous burden of existing government debt, coupled with the need to support spending on defence and welfare, it is likely that some tax increases will be needed.

Individuals pay the majority of taxes, with income tax, NI and VAT making up about 61% of receipts in the current year. The promise not to increase these will greatly reduce fiscal options. 

One idea which seems to be gaining traction within the political left is the possibility of taxing wealth, rather than income and spending. This is supported by influential voices such as Oxfam and Tax Justice. 

This could take the form of higher taxes on property, land, or assets, but the design of any tax scheme - and the threshold at which one is wealthy - would be critical. 

Taxes on the value of housing, for example, could easily impact many homeowners in the South East, who own valuable property but do not have unusually high incomes.  

Any incoming Prime Minister would face the same fiscal challenges – and there are no obvious or easy answers. 

OECD warning: weak growth leaves little room for relief 

The OECD’s latest assessment points to a difficult operating backdrop for food businesses: modest growth, sticky inflation, and continued pressure on public finances. The organisation's new review forecasts fairly modest economic growth in 2026 alongside relatively high inflation, although conditions are expected to improve slightly in 2027. It also highlights the need for fiscal discipline and welfare reform, while pointing to the growing cost of pensions as a particular challenge.  

Health & Social Care Committee 

The cross-party Health and Social Care Committee has called for tougher action to tackle obesity, including stronger restrictions on advertising, mandatory front-of-pack labelling and healthy food sales targets for retailers. 

The Committee argues that the current food environment continues to steer consumers towards less healthy choices and is urging government to act more decisively. 

Obesity remains a significant challenge for the UK economy and society, with the Committee citing costs of tens of billions of pounds each year and growing pressure on public services. 

For food businesses, the report signals that there is still pressure within the political system to transition the population to a healthier diet. 

IGD opinion 

Aligning with IGD's Eatwell economics report, the Health and Social Care Committee reinforces that obesity is no longer solely a public health issue but also an economic and food-system challenge. 

Lasting progress will require collaboration between industry and government to improve diets while ensuring healthy choices are accessible, affordable, and appealing for consumers. 

New Wegovy pill, same drug: has anything changed? 

Oral semaglutide (GLP-1, Wegovy pill) launched in the UK on 6 July, following MHRA approval on 11 June. It is currently available via private prescription only, with NHS availability dependent on a pending NICE appraisal. 

The tablet requires a strict fasting protocol: taken on an empty stomach with no food or drink for at least 30 minutes afterwards, a daily routine that may prove harder to sustain than a weekly injection, despite removing the needle-related barrier. 

See our latest article looking at GLP-1's. 

IGD opinion 

The tablet format lowers a key barrier to further uptake of GLP-1 drugs. Access remains uneven in the near term, favouring those able to pay privately while NHS availability awaits further evaluation. As the GLP-1 user base potentially grows and diversifies, understanding who takes up oral treatment. and whether they sustain it, will matter as much as tracking uptake itself. 

Discover more about IGD Futures GLP-1 insights programme - Email [email protected] 

Front of pack health labelling is shifting globally 

What began as a single-country experiment in Chile has become one of the dominant global models for front-of-pack labelling 

Since Chile's mandatory warning labels took effect in 2016, Peru, Uruguay, Mexico, Argentina, Brazil, Colombia, Venezuela, Israel, and Canada have all introduced their own mandatory "high in" warning schemes.  

The evidence base is now substantial enough to draw firm conclusions: Chile's combined package of warning labels, marketing restrictions and school sales bans has been linked to a 23% fall in calories, 37% fall in sugar, and 16% fall in saturated fat purchased from foods high in nutrients of concern. 

To find out more, read Front of pack labelling around the world.

 IGD opinion 

This matters now because the contrast with Europe's stalled progress is becoming harder to ignore. 

While the EU has spent several years failing to deliver the harmonised, mandatory scheme first promised in its 2020 Farm to Fork Strategy, mandatory warning labelling has quietly become the default approach across the Atlantic, backed by a growing evidence base that voluntary schemes like Nutri-Score can't match. 

For UK and EU food and drink businesses watching the direction of travel, Latin America's experience provides an inkling to where mandatory FOP regulation may be heading, and the compliance and reformulation challenge that would come with it. 

Chancellor’s Mansion House Speech 

The Chancellor’s Mansion House speech focused on three key challenges:  

• Spreading growth across the country and decentralising decision-making 

• Building the industries of the future within the UK and securing strategic activities 

• Rebuilding ties with the EU 

The Chancellor also tackled the question of AI. Some themes echoed those developed by Andy Burnham in his speech in Manchester earlier this month. The Chancellor did not give much coverage of agri-foods however, other than a passing mention.   

IGD opinion 

For food businesses, the key signal is that economic policy is likely to remain focused on regional growth, strategic industries, and closer EU engagement, even if agri-food was not a central theme. 

Geopolitics keeps energy and shipping risks elevated 

For food businesses, global conflict remains a key upside risk to inflation through energy, freight, fertiliser, and commodity markets, even where immediate pass-through is uncertain. 

Persian Gulf 

Intensifying conflict in the Persian Gulf has caused oil prices to spike and shares prices to fall. The Gulf remains effectively closed to shipping of oil, gas, and other products. 

The US has launched further airstrikes against Iran, whilst Iran has attacked neutral shipping with missiles.  

President Trump has announced a renewed blockade of Iranian ports. Plans to for the US to charge a toll on all ships passing through the Strait of Hormuz have been dropped, however. 

Any return to pre-conflict “normality” appears as far away as ever.  

Russian / Ukraine 

Russian oil exports have also been disrupted this week, with Ukraine maintaining attacks on Russian oil infrastructure and shadow tanker fleet. 

Russia is producing large volumes of oil for export, but most is being shipped as crude, with Russia’s ability to refine it dwindling. 

Large volumes are also believed to be stuck at sea, rather than being delivered to customers as tankers are unable or unwilling to complete their journeys.