Only 11% of food and drink companies said they were more confident about the future since the Brexit vote, the FDF revealed. The survey also found that 71% of businesses employing non-UK EU staff said its EU national workers were concerned about the referendum’s outcome. The FDF called for urgent assurances from the government that the industry’s continental workforce could remain in the UK.
FDF director general Ian Wright told FoodManufacture.co.uk: “There are a number of concerns among businesses, and it’s about the lack of information coming.
“Businesses want certainty, and the manufacturing business probably wants certainty more than most people because it has fixed costs. It has to buy raw materials and to manage the equipment and it has to martial labour forces. So, if it’s got uncertainty in any of these areas, inevitably people are going to get quite bothered.”
‘People are going to get quite bothered’
Most companies reported rising ingredient prices as a result of the falling value of sterling, the FDF survey revealed. That meant product margins were also falling for most survey respondents. The FDF expected this trend to continue for at least the next 12 months.
Wright said: “We share government’s view that we need to make the best of Brexit. Food and drink industry confidence is low. Slower revenue growth, coupled with prolonged business uncertainty, is affecting the industry’s ability to invest.
“The assurances we heard from government last week [at The Conservative Party Conference] must be underpinned by credible plans for restoring confidence and negotiating a workable future relationship with the EU. Working with government through an industrial strategy partnership, we believe we can counterbalance uncertainty arising from the EU exit process and secure world-class status for the sector.”
An extended period of uncertainty
The FDF said urgent action is needed from the government to ensure ingredients and raw material imports from the EU and EU Free Trade Agreement (FTA) countries are not subject to tariffs. Meanwhile, Wright suggested food and drink manufacturers should prepare for an extended period of uncertainty.
“They [manufacturers] have to plan for a period of particular uncertainty,” said Wright. “I don’t think we’ll be in a position to know enough of the answers before mid-year, or the end of next year. So, I think we’ll have an 18-month period of considerable uncertainty.
You’ve got to make your plans in line with that uncertainty. I personally think we’ll see a period of roller coaster type information. One week business confidence is high, one week it’s low. One week there are indications it’s getting better, the next the indications say it’s getting worse.”
Meanwhile, the FDF boss had urged manufacturers “don’t panic” over Brexit worries. He said the process would be a slow burn, and until the UK triggers Article 50, it would be difficult to make an assessment of whether the government’s negotiations were sufficient.
FDF confidence survey – at a glance
- 69.5% of businesses less confident than pre-Brexit vote
- 11% of business more confident than pre-Brexit vote
- 9% of businesses with non-UK EU staff said their continental staff planned to go home