Food and drink manufacturing sector to contract in 2023

By Michelle Perrett

- Last updated on GMT

The manufacturing sector is set to contract in 2023
The manufacturing sector is set to contract in 2023

Related tags Supply chain

The food and drink manufacturing sector is forecast to contract by -1.5% in 2023 due to the impact of the current economic crisis.

The Make UK/BDO Q4 Manufacturing Outlook survey revealed that the overall British manufacturers are set to plunge into recession next year as the deteriorating economic conditions at home and abroad exert a vice-like grip on the sector. 

According to the report the Food & Drink ​subsector, as the UK’s largest subsector in terms of Gross Value Added (GVA),  has the largest influence on overall UK manufacturing performance. The total proportion of manufacturing GVA that the Food & Drink subsector accounts for has increased by a percentage point this quarter compared to last, rising to 19.3%.

The subsector is one of only two to retain a positive output forecast for 2022 this year, with a growth of 2.7% in output expected.


However, the forecast for 2023 is less positive, with a small contraction of -1.5% expected, tne report revealed. In keeping with output forecasts, the employment outlook is down, with a total growth in employment this year expected to be 1.7%, but with a decline of -3.7% in 2023. 

The Make UK/BDO Q4 Manufacturing Outlook survey also showed that the whole of manufacturing is forecasted to contract by -3.2% in 2023. This comes on the back of a forecast -4.5% contraction this year, the number for this year is relative to a very strong 2021, which reflected the pandemic bounce back.

“While the Chancellor has already brought in some welcome measures to help ease the cost pressure on companies in the short term, it may not be too long before we see him having to bring more firepower to ease cost pressures,”​ said Stephen Phipson, chief executive, Make UK.

No growth

“However, the bigger issue is that the UK risks sleepwalking into an acceptance that little, or no growth is the norm. Government needs to work with industry as a matter of urgency to deliver a long-term industrial strategy that has growth at national and regional levels at its heart.” 

Richard Austin, ​National Head of Manufacturing, BDO said: “Manufacturing input prices are growing rapidly, so it is little wonder UK manufacturers are having to pass the costs onto their customers in order to remain viable.

“Without the right government support and reassurance, manufacturing businesses will be inclined to retain cash to keep the doors open, rather than invest cash in future growth and competitiveness of the sector. There is little clarity on how the new government plan to build the right longer-term environment in which the sector can effectively plan.”


Related topics Supply Chain

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