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The Autumn Budget, announced yesterday (26 November), reflects the continuing challenges for businesses across the UK, including the food and drink sector.

While food price inflation has eased, the headline rate of 4.9% remains high, disproportionately affecting lower-income households and sustaining pressure on retailers and suppliers alike.

The government aims to tackle ongoing cost pressures and supply chain disruption with a set programme to improve trade flow, ease regulatory burdens and support long-term industry growth.

Trade measures to ease costs

One of the most tangible interventions is the government’s work to improve UK-EU agri-food trade. A new agreement is expected to streamline exports and imports with the UK’s largest trading partner, cutting red tape and saving money on shipments of fresh food. This has been welcomed by producers and retailers who continue to face increased paperwork post-Brexit.

The introduction of a Food Inflation Gateway also signals a more coordinated approach to future regulation. This aims to give food businesses better visibility and help contain inflationary pressures.

Exporters in Scotland, Wales and Northern Ireland in particular stand to benefit from both a forthcoming UK-EU SPS Agreement, which reduces export costs for products like Scottish Angus beef and Welsh Lamb, and the UK-India Free Trade Agreement, which is forecast to boost annual economies by £190 million in Scotland, £80 million in Wales and £50 million in Northern Ireland, supporting growth across a range of food and drink categories.

Regulatory reform

Among the measures announced is an upcoming refresh of the UK’s food regulatory framework. The chancellor announced that the Food Standards Agency (FSA) has been tasked with creating a national framework to streamline food standards and hygiene regulation for large compliant supermarket groups.

Centralised data and consistent enforcement are expected to reduce administrative burdens and modernise the regulatory process. However, the benefits skew heavily toward major retailers rather than the full supply chain, meaning that for many, regulatory complexity remains unchanged. Passing regulatory authority to the FSA may see the programme expand in the future.

One significant development is the extension of the Soft Drinks Industry Levy to include high-sugar milk-based drinks, like milkshakes and RTD coffees, with the threshold for the levy also being lowered from 5g to 4.5g per 100ml. Manufacturers will be given until 1 January 2028 to reduce sugar in their drinks.

This has drawn mixed responses from the food industry – while the Food and Drink Federation welcomed the changes, saying they “go some way to protecting the investment companies are making to help people follow healthier diets,” others warned of the cost impact and operational disruption of reformulation.

Naomi Ikeda, senior manager, and Delphine Malarde, manager at consultancy Ayming UK, said that while ”the ambition is the right one,” the reality is ”far more complex than swapping sugar for a like-for-like alternative”.

”When the original levy landed in 2016, manufacturers poured huge effort into R&D to cut sugar without compromising taste, texture or shelf-life. And it quickly became clear: sugar isn’t just a sweetener – it’s a structural ingredient. Remove it, and you disrupt everything from viscosity to fermentation,” they noted.

”Layer onto that the growing scrutiny of sweeteners and you get to the heart of the issue: are we driving genuinely healthier outcomes, or simply shifting the problem elsewhere?”

While they emphasised that reformulating and sourcing functional alternatives are not small adjustments and will require significant investment, they stated that with ”the right support,” the F&B industry can use the changes in legislation to drive healthier innovation.

”R&D tax relief is a critical tool here. Much of the work needed, from ingredient trials to process optimisation, is likely to qualify, helping companies offset the financial burden of reformulation.”

Tariff suspensions extended

Tariff-free imports will continue until 31 December 2026, maintaining relief on products such as aluminum frames used in the manufacturing of food and beverages, and key ingredients used by UK food producers.

Reviews of Autonomous Tariff Quotes (ATQs) will see current fish and seafood ATQs maintained, while the raw cane sugar ATQ review is ongoing and could see an increase for 2026.

Russell Eley, managing director at Tom Walker & Sons, which specialises in chilled food distribution, warned that the measures fail to address the reality of rising operational costs.

He said: “The Budget offers limited reassurance for those of us operating in chilled distribution. Rising wage costs, frozen tax thresholds and persistent inflation continue to increase pressure across the cold chain… With no targeted measures on fuel, business energy or supply-chain resilience, the practical challenges facing chilled logistics remain unchanged.”

Eley continued that for premium chilled goods – such as imported cheeses – the combination of rising costs and ongoing consumer caution means tighter margins and tougher negotiations throughout 2026.

Consumers likely to continue to be cautious

James Walton, chief economist at IGD, voiced his concerns about rising cost pressures for consumers, who have already exhibited caution in the face of inflation.

“This has been a tough Budget for shoppers… IGD expects food inflation to persist into 2027, with government policy contributing about a third of this pressure,” he said. ”Food will remain relatively more expensive, and shoppers will stay extremely cautious.”

Walton continued that the F&B sector faces several years of weak volume growth and tight profits. However, he highlighted that there are areas of opportunity, particularly in horticulture and poultry, where targeted policy changes could unlock £5 billion of investment and create up to 60,000 jobs.

While the Autumn Budget does introduce measures that may ease trade friction, streamline regulation for large retailers and support key export markets, it stops short of delivering broad-based relief for the entire food and drink ecosystem. Cold-chain operators, manufacturers heavily exposed to energy costs and labour-intensive producers may find little immediate benefit.

With food inflation expected to remain stubborn, consumer confidence fragile, and operational costs elevated, the coming years will demand resilience, innovation and efficiency improvements across the industry. Many businesses will welcome the steps taken, but will be watching closely for future policy interventions that address the full complexity of the UK’s food system.