In its latest State of Industry Report for Q3 2025 it found that confidence among food and drink manufacturers has plummeted to -60% down from -40% in Q2 and the lowest since the Covid pandemic in Q3 2020. This marks the sixth consecutive quarter of negative confidence.
Its research found that 90% feel pessimistic or nervous about the Government’s upcoming Budget – with 88% particularly concerned about the impact of additional taxes or business costs.
Half (50%) are concerned about the risk of more burdensome regulation while more than two-fifths (45%) are concerned about new policies that will negatively impact household finances.
In response to the increased employment costs introduced in last year’s Budget, two thirds of businesses (66%) have already or will be reducing headcount. Three quarters (74%) of businesses have had to pass on some costs to consumers and over a quarter (26%) are no longer creating new roles.
Meanwhile, almost a third (29%) reduced or cancelled plans to invest in the UK to cover these costs.
While two fifths of manufacturers (40%) are understandably concerned that there won’t be policies to drive growth in the upcoming Budget.
FDF is calling for Government to restore business confidence by ensuring no further burdens are added in the upcoming Budget and called of it to partner with industry on a long-term plan to drive investment into the sector to unlock £14bn of growth.
“This report captures the mood of our sector and as we enter Christmas trading. The combination of tax rises in the last budget, increasing costs like EPR, and policy uncertainty makes for a tough business environment. What’s more, food companies can readily see how impacted shoppers are by continued food price inflation and how careful households are being about spending in the run up to Christmas,” said Karen Betts, Chief Executive, FDF.
“We fully support the government’s stated ambition for economic growth, and as the UK’s largest manufacturing sector and pillar of the ‘everyday economy’, we want to partner with government to make this happen. There are huge productivity gains to be made in our sector, alongside work to be done to improve environmental sustainability and healthy options. But we need a simpler, stable regulatory pathway if this is to happen, and one that operates across government. And real reform of the unnecessary and out of date regulations that tie companies down and cause opportunity costs.”