The UK’s food and drink manufacturing sector has reported a surge in optimism as it entered the new year as renewed political certainty boosted business confidence.
Optimism jumped 29 percentage points in the final three months of last year compared to the first quarter of 2019.
However, despite the outcome of December’s General Election, net confidence remained negative overall as the industry continued to face uncertainty over the future relationship between the UK and the European Union after Brexit.
In total, 40 per cent of manufacturers said they are looking forward to increased certainty over future UK-EU relations, according to the latest research by the Food and Drink Federation (FDF).
During 2019, 70 per cent of businesses reported expenditure on stockpiling, with the majority spending at least £100,000 and a quarter spending more than £1m.
However, almost half of food and drink manufacturers (47 per cent) predicted that UK business investment will rise this year, while 63 per cent said increased domestic demand would be an opportunity in 2020.
Larger businesses are more optimistic about prospects for the UK economy in the year ahead compared to small and medium-sized enterprises (SMEs), the research found.
Going forward, the key concerns for food and drink manufacturers were the cost of ingredients, inconsistent policies on plastic reductions and customs issues.
FDF chief executive Ian Wright said: “It’s no surprise that the industry remains troubled following a period of sustained uncertainty, with our future relationship with the EU still unresolved. But our industry is phenomenally resilient.
“FDF is absolutely committed to working with the government and the devolved administrations to develop detailed plans and practical solutions for our vital industry as we leave the EU. It is essential that we minimise friction in whatever way possible, while maintaining high standards for UK food and drink.”