Food and drink companies in England and Wales have raised their growth forecasts and plan to create more than 75,000 new jobs over the next five years, despite uncertainty around the UK’s decision to leave the European Union (EU).
That is among the principal findings of Lloyds’ third annual study into the UK’s food and drink sector.
The banking group said that British food and drink companies are “eager to shrug off uncertainty” that built up in the run-up to the EU referendum, and forge ahead with plans to enter new UK markets and develop new products. The industry as a whole is expected to record growth of 19% in the next five years – up 3% from last year.
The report is Lloyds’ first into the food and drink industry since Britons voted to leave the EU in June, and it appears as though the uncertainty before the vote has had a greater effect than the result itself.
Just over half (52%) of firms said that the build up to the EU referendum had had a negative impact on their business. The majority of firms said that the EU referendum had affected their long-term planning (89%) and their investment plans (82%) leading up to the vote, although it now seems that the sector is looking to put the referendum behind it.
Almost half of firms (44%) said that planned investment in their business had increased since the vote result, twice as many as those who said it had fallen.
But businesses do see leaving the EU as the biggest potential threat to the industry, a view which remains unchanged since last year, in spite of the apparent bounce-back since the Brexit vote.
Lloyds Commercial Banking head of client propositions Andrew Connors said: “The food and drink industry has faced some unprecedented challenges in 2016, notwithstanding the uncertainty surrounding the EU referendum vote.
“However our research shows a relatively confident and upbeat sector which recognises the challenges ahead and is finding ways to address them. In particular, food manufacturers are working together more to improve productivity through joint ventures.”
Food and drink producers still plan to achieve growth by entering new export markets, with 30% focusing their growth ambitions overseas – as many as last year – but the number of exports targeting Western Europe has fallen by 13%. That figure means that less than all exporting companies are now targeting their products to the EU.
Ian Wright, director general of the Food and Drink Federation, said that the relatively upbeat figures reflected the resilience of food and drink operators, and shouldn’t be confused for vindication of the UK’s choice at the polls.
He said: “The Lloyds Bank food and drink report this year is as useful as ever for revealing the challenges and opportunities faced by the sector.
“Bringing the right people with the right skills into the industry is central to our future success and we must also address the biggest business challenge of our times. The decision to leave the European Union poses a major test to most food and drink businesses. Yet we are a resilient and resourceful industry. We are now focused on transforming those very real risks into real opportunities.”
Lloyds Commercial Banking head of food, beverages and tobacco Elena Paitra added: “Although export intentions have declined slightly for UK food and drink producers, it’s encouraging to see that almost a third of producers plan to achieve growth by focusing their ambitions overseas. It’s important that the sector continues to focus on export growth as this is clearly key to maximising future opportunities.
“We’re confident that the sector can continue to grow in the UK and overseas.”
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