Barclays Economic Update: Brexit uncertainty, a slowdown in major markets and trade war impact UK manufacturing sector

The q3 manufacturing outlook survey, published by Make UK and BDO LLP indicated that weaker currency is not supportive to the industry, contrary to claims from politicians and commentators. This indicates that the foreign customers are not buying British goods even though they are 6.0% cheaper as compared to their price in 2018. According to the survey, the total order balance declined to 2.0% in q3’19, indicating the significant rate of weakening which has taken place since the start of 2019.

Additionally, this will certainly turn negative in q4’19, restricting a turnaround in the economy. Output declined to 4.0% in q3’19 from 17.0% in q2’19, indicating there is little evidence that stockpiling is building, leaving companies less prepared for ‘no deal’

CBI Highlights of this month’s Economy in brief include:

The economy shrank in Q2 by 0.2% – the first decline in GDP since the end of 2012
The latest business surveys paint a weak picture of the economy, with manufacturing activity flat, services in mild decline, construction in contractionary territory and challenging retail conditions
British companies exposed to Europe have cut their investment by about 11% because of Brexit, which has had the effect of cutting UK productivity by 2-5%
However, the Bank of England have amended their evaluations of the economic impact of no deal in the short-term, from a decline of 8% down to a decline of 5.5%.

Brexit: FDF will be hosting two additional Brexit webinars before the end of the month. The first, ‘How to continue importing and exporting food and drink in a no-deal Brexit’, will take place on 23 September and will cover what companies can expect the import and export process to look like. The second, ‘Immigration and EU workforce in a no-deal Brexit’, will give an overview of what you can do to support your current EU workforce and prepare for changes to the immigration system after Brexit.

Plastics and Packaging: The Environment and Rural Affairs Committee published its report on plastic food and drink packaging, which looked at the role of packaging in reducing food waste. The main conclusions were:

For the de minimis threshold that determines which businesses must report on packaging to be significantly lowered
For the plastic packaging tax, which would apply to packaging with less than 30 per cent recycled content, to be modulated so that there are lower fees for higher levels of recycled content. The committee also concluded that imported, filled packaging should not be exempt from the plastic packaging tax, as the Treasury has proposed
That local authorities should be required to collect an agreed core set of dry materials for recycling
To support the deposit return scheme, but monitor its financial impact on local authorities
To support extended producer responsibility, so that producers pay the full costs of managing packaging waste.

Public Health England strategy 2020 to 2025:

On 10 September, Public Health England published its strategy 2020 to 2025 setting out its priorities over the next five years. Its main principles are to:

Keep people safe from threats such as environmental hazards and infectious diseases by working to prevent risks from materialising, whilst having the capability to respond to emergencies and reduce harm when they do
Prevent poor health so that people can have longer and healthier lives, be less reliant on the NHS and social care, and live independent lives for as long as possible
Narrow the health gap between the most and least deprived
Support the economy by maintaining a healthy population.

DEFRA Family Food Survey 2017/18

DEFRA has published its latest Family Food report, a summary of expenditure of food and drink during 2017/18. The report is available here with key results described below.

Although based on purchasing data rather than consumption data, trends in Family Food are considered broadly consistent with other sources such as the National Diet and Nutrition Survey.

Further Information

Energy intakes (converted from purchasing data):

Energy intake per person is 2175kcal a day (a 1.8% increase since the previous year) for consumption both in and out of home.
Energy intake from eating out is 223kcals per day (a reduction of 1% since the previous year). Eating out accounted for 10% of total energy intakes.

Nutrient intakes (both in and out of home):

Fibre intakes are 14.5g a day (remaining roughly static since 2012).

Total sugars and non-milk intrinsic sugars both continue the downward trend with daily intakes of 112g and 70g respectively.

Sodium intakes are 2.65g a day (down 0.9% since the previous year) which is equivalent to 6.6g of salt. This excludes contribution from table salt.

Expenditure data (both in and out of home):

An average household spent £45.31 per person per week on food and drink (including alcohol). When inflation is taken into account, the amount spent was 0.3% more than 2016/17 and 3.8% more than 2014.
The percentage of spend on food and non-alcoholic drinks for the average household was 10.6%, slightly higher than the previous year.
For households with the lowest 20% of income, the percentage of spend on food is the second highest at 15.2%, after housing, fuel and power.

Groceries Code Adjudicator: On Monday 23 September at 11.30am join Christine for 30 minutes, as she talks through her latest updates as the GCA.

She’ll go through the latest issues she’s been hearing from suppliers and answer your questions about the work of the GCA and the Groceries Supply Code of Practice. To submit a question in advance, please email enquiries@groceriescode.gov.uk.