UK food manufacturers confidence drops as Iran war drives costs higher
Britain's food manufacturing sector is facing a fresh deterioration in sentiment as energy, transport and packaging costs rise again. Confidence in the industry falls to its weakest level since the 2022 energy crisis, underscoring mounting pressure on prices, jobs and investment plans.
Highlights
- Food and Drink Federation reports UK manufacturers' confidence plunges to -64 in Q1 2026, matching lows seen during early COVID and Ukraine invasion.
- Energy, plastic packaging (+15%), and transport costs (+20%) drive operating pressures, with next-quarter outlook score at -51 indicating persistent concerns.
- 82% of members plan price hikes; 33% expect to cut jobs or marketing; 26% will delay or halt investment as inflation may reach 9% in 2026.
Industry survey signals deeper cost strain
As reported by the Food and Drink Federation, business confidence among UK food and drink manufacturers falls to -64 in the first quarter of 2026, down from -31% previously and matching levels seen after Russia's invasion of Ukraine in 2022 and at the start of the COVID pandemic.The industry body, which represents 12,000 manufacturers, says its latest State of Industry report points to rising energy prices as a major driver of worsening sentiment. It says the cost of plastic packaging has increased by up to 15%, while some members report transport costs rising by more than 20%. Fertiliser costs also remain a concern for the sector.
An outlook confidence score for the next quarter stands at -51, indicating that manufacturers expect pressure on operating conditions to continue.
Inflation, jobs and investment under pressure
The report shows 82% of members say they will have to raise prices in response to higher costs. It also says 33% plan to reduce headcount or cut marketing spending, while 26% will pause or cancel planned investment.The federation says 69% of members view support with energy costs as a government priority to ease cost pressures across the industry. In April, the group forecast that food and drink inflation could reach at least 9% by the end of the year, pointing to further strain for consumers and manufacturers alike.
In our earlier coverage of the 2026 Joint Economic Report, we outlined how lawmakers are framing aging demographics, healthcare and Medicare costs, and labor-force trends as key drivers of long-term fiscal strain in the U.S. The report argued that restoring solvency will require difficult budget tradeoffs alongside policies aimed at supporting long-run economic output rather than relying on higher government spending.
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