Your overview of political and economic news with a focus on the food and consumer goods industry, featuring the latest developments and guidance on COVID-19 and adapting to a new relationship with the EU.
Lockdown restrictions continue
In announcing a delay to the lifting of lockdown restrictions until 19 July the Prime Minister noted that the government will monitor the position every day and if after two weeks (28 June) they have concluded that the risk has diminished then they reserve the possibility of proceeding to Step 4 and full opening sooner.
However, with cases continuing to rise government spokespeople are managing expectations that restrictions will remain in place until 19 July.
See also the latest on restrictions in Scotland, Wales and Northern Ireland.
Free COVID-19 tests for employers
Employers who have already registered to obtain free lateral flow COVID-19 tests from the government can now continue to order them until 19 July (ie: the date that lockdown measures are now expected to end). Note that it is not currently possible to register new businesses to this scheme, as the deadline was 12 April – unregistered businesses must obtain tests privately. Lateral flow tests are only for routine testing and screening of the workforce – those with COVID-19 symptoms should use PCR tests instead.
Australia / UK trade deal
More details have been provided by government following the announcement that the UK has secured a trade deal with Australia.
The ‘agreement in principle’ of a new trade deal is the first that the UK has negotiated from scratch in the post-EU period. The deal will cover agri-food goods which will be covered by quotas for a period of up to fifteen years.
Trade data suggests slump in exports to the EU
Trade data from the Food and Drink Federation (based on an HMRC source) shows that UK food and drink exports to the EU fell sharply in early 2021. Exports to the EU were worth £3.1bn in Q4 2020, but this fell to £1.7bn in Q1 2021. Exports to Ireland were hit especially hard, possibly due in part to challenges in using GB as a “land bridge” between Ireland and Continental Europe.
Exports to non-EU destinations remained stable at £2.0bn. This is the first quarter on record that exports to non-EU customers have exceeded those going to the EU. It is not clear whether this change is due to EU Exit, or to other factors, such as COVID-19 disruption or bad weather in the Channel.
Labour issue concerns continue
Food and consumer goods industry stakeholders continue to raise concerns over labour shortages, particularly relating to the availability of hauliers.
Talks took pace last week between industry stakeholders, the Department for Transport, the Department for Work and Pensions and the Department for Environment, Food and Rural Affairs to discuss what measures can be taken to address the challenge, which is expected to continue for a number of months.
IGD’s research shows labour issues are not limited to hauliers, with broader challenges in the recruitment of workers. The foodservice and hospitality sector in particular report increasing need for workers, with more than 70,000 unfilled vacancies, even though many outlets are running below their usual capacity.
Inflation up sharply
Annual “all items” inflation in the UK rose sharply in May 2021, moving from +1.6% to +2.1%, when measured via the CPIH method (Consumer Prices Index including owner occupiers’ housing costs). This is the highest level for over two years. Major contributions to inflation came from transport (especially motor fuel), clothing (a broad range of items) and recreation / culture (especially software downloads).
Other ONS data shows that costs in a wide range of business sectors are rising steadily, due to increasing global demand for fuel and resources as major economies move into recovery. This suggests that inflation may rise further in the months ahead.
Prices for food and drink bought at retail continued to fall however, the annual rate moving from -0.5% in April to -1.3% in May. Prices for food and drink bought at foodservice appear to have risen, but this part of the data should be treated with caution, according to ONS, due to a very restricted data pool in May 2020.