Brexit Jitters Hit UK Food And Drink Sector Confidence, But Investment Plans Continue
UK food and drink manufacturers are feeling the pinch of Brexit uncertainty, but they are moving forward with investment plans to boost productivity, automation and new-product development.
The Food and Drink Report 2018, published Monday 21 May, by accountancy and business advisory firm BDO LLP, revealed that confidence among UK food and drink manufacturers has fallen by 20%. It attributes this drop to the uncertainty surrounding Brexit.
Concerns over skills gaps and labour are still a major concern to the industry, and the UK’s relationship with the EU is only adding to the concern for business leaders, the study found.
Some 24% of respondents believe that the government can negotiate a favourable post-Brexit environment for the industry, while only 2% think that Brexit will have a positive impact on their business in the next year.
Paul Davies, head of food and drink at BDO, said, “Food and drink businesses are heavily reliant on overseas labour, with one in three workers being from the EU. The majority of firms we’ve spoken to believe that Brexit is likely to have a negative impact on attracting labour and skills in the future, and, naturally, that’s becoming a growing concern for them.
“It is crucial the government provides some clarity over our EU exit quickly and further supports an industry that is a huge driving force for our economy,” Davies added.
Productivity Pushing Growth
Despite all the uncertainty surrounding Brexit, 60% of manufacturers surveyed are generally positive about the future of the industry, with 76% expecting revenue growth and 67% believing that order levels will increase in the next year.
BDO’s report notes that almost 90% of food and drink manufacturers believe that productivity is a major focus area. Some 63% are looking to make better use of staffing resources, and 54% are aiming to improve materials utilisation and reduce waste.
This is also driving investment in automation. According to BDO’s report, the objective for almost 50% of all automation projects currently under way is to boost productivity.
Davies adds, “The focus on new-product development highlights the value of innovation within the industry.
“The government has committed to boost spending on R&D incentives, however, there is still a relatively low awareness around the range of activities that might qualify. I would urge that R&D tax reliefs should be high on the agenda for innovative food and drink businesses,” he said.
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Aidan O'Sullivan. Click subscribe to sign up to ESM: European Supermarket Magazine.