The Chancellor delivered the Autumn Statement and set out his priorities on Stability, Growth and Public Services. Key points to note:
- Households’ real disposable income is forecasted to fall by 7.1% cumulatively between 2021-2024, a drop large enough to wipe out gains of the last seven years. However, these declines would have been greater without the energy and cost-of-living support measures (summing up to over £100bn).
- Food and non-alcoholic drink inflation is projected to remain high in the near term, with the weak pound pushing food prices up. It’s expected food inflation will start easing in Q4 2023, and food prices stabilising by 2025 and contributing to the overall inflation rate modestly only.
- UK inflation is expected to peak at 11.1% in Q4 2022 (would have been 13.6% without the energy price guarantee). Over 2022, inflation is expected to be 9.1% and then expected to fall to 7.4% in 2023. The economy is projected to have already reached recessionary territory now, and expected to shrink by 1.4% in 2023.
Some of the key announcements in the statement include:
- Removal of import tariffs on over 100 goods for two years, including food ingredients not produced in the UK. We are still waiting for further details on products and timings.
- The publication of the Terms of Reference for the Energy Bill Relief Scheme review led by the Treasury.
- A new skills reform adviser has been appointed and the Department for Work and Pensions will undertake a review of barriers to workforce participation.
The Food and Drink Federation Chief Executive Karen Betts said: “We recognise the difficult range of issues the Chancellor had to deal with in today’s Autumn Statement. While there was positive news on tariff suspensions, something we have long called for, food and drink manufacturers would have liked to have seen more measures to help our industry deal with the powerful inflationary pressures we are facing.
“With food and drink inflation now standing at 16.4% and energy costs now accounting for a quarter of food and drink businesses’ operating costs, our sector would have liked to have seen more clarity on future energy support, a plan for working with business to tackle labour shortages, commitments to improve the implementation of the EU trade deal, and regulatory reforms to reduce costs to businesses and to help our sector weather the inflationary crisis while protecting consumers as far as possible from price rises.”