FDF urges UK government to protect squeezed £42bn food industry

The Food and Drink Federation (FDF) has issued a stark warning to Westminster, revealing that while the food and drink manufacturing sector remains the powerhouse of the British economy with a £42bn contribution, it is being squeezed to a breaking point by global volatility and soaring operational costs.

New data from the FDF’s Powering Communities report cements the industry’s status as the UK’s largest manufacturing sector, accounting for nearly a quarter (23.7%) of all manufacturing turnover. However, the prestige of the UK’s biggest title is being overshadowed by a grim reality: in 2025, insolvency rates in food manufacturing grew at nearly triple the rate of the wider manufacturing industry compared to 2019 levels.

Despite the sector providing nearly half a million jobs (489,333) across every region of the UK, manufacturers are struggling to pivot from survival to growth. Production costs rose by an average of 4.4% last year, with small-to-medium enterprises (SMEs) bearing the brunt with spikes of 5.3%.

Ongoing conflict in the Middle East and persistent energy inflation have created a rollercoaster environment. Because energy is embedded in every stage of the process — from cold storage to high-heat processing — the FDF is calling for the sector to be formally included in the British Industrial Competitiveness Scheme to mitigate these crippling overheads.

“Manufacturers are squeezed,” said Karen Betts, chief executive of the FDF. “More often than not, they are now running to stand still, investing to maintain operations rather than to fit them for the future. If we want a sustainable, resilient food system fit for an island nation, we need companies to be investing in future technologies and healthier products.”

The report highlights the sector’s unique role in levelling up the UK, representing a third of all manufacturing turnover in Scotland (32.4%) and Northern Ireland (35.1%). Recent landmark investments — such as Kellanova’s £75m expansion in Wrexham and Haribo’s new warehouse in Yorkshire — demonstrate the industry’s potential to drive regional prosperity.

However, the FDF warns that without government intervention, the country’s status as a global hub for food innovation is at risk. To reach the industry’s ambitious target of £50bn GVA within the next decade, the FDF has set out a clear roadmap for the government:

• Parity with other sectors: support on par with the automotive and aerospace industries.
• Energy support: immediate inclusion in competitiveness schemes to handle soaring utility costs.
• Incentivising innovation: mitigating risks for SMEs investing in green tech and new packaging materials.
• Skills and R&D: ensuring scientists and engineers can access specialised training and R&D funding for healthier product reformulations.

The food and drink supply chain is currently worth £172bn to the national economy, but the FDF argues that unlocking the next £8bn in growth rests entirely on the government creating a stable investment environment.

As the cost-of-living crisis continues to pressure household budgets, the FDF insists that a resilient food manufacturing base is the best defence against future inflationary shocks.