State of industry report Q2 2023
27 August 2023
Significant labour shortages have cost businesses £1.4bn over the last year, with companies being forced to leave vacancies unfilled and reduce production – all of which contributes to rising wage bills, higher prices and stifles growth, which is vital for a strong economy.
Eight out of ten of the UK’s biggest suppliers (by turnover) think that the government’s plan for UK-wide ‘not for EU’ product labelling is not needed to ensure continued supply of food into Northern Ireland from Great Britain and should be scrapped to avoid damaging impacts for UK businesses and shoppers. New arrangements to supply Northern Ireland (the Windsor Framework) come into effect in October and while well-intentioned, will inadvertently lead to further price increases for consumers.
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- The FDF net confidence score gained 18 percentage points in Q2, reaching -12%, reflecting perceptions that market conditions have stabilised.
- Labour shortages continued to fall in Q2 to 4.8%, down from 5.9% in Q1, however vacancies persist across all skill levels.
- During the year to June (Q3 2022 – Q2 2023), output lost due to labour shortages is estimated to be £1.4bn, while the loss for Q2 2023 is assessed at £192m.
- Reported total cost increases facing manufacturers in the year to June were 17.8%, while selling price rises were less at 15.4%.
- It’s expected that costs will continue to rise over the next year by 3.1%, and prices by 2.7%, on average.
- Innovation is a top priority for 54% of manufacturers, while 41% focus on adapting supply chains and restructuring operations.
- More than 78% of the UK’s biggest suppliers believe government plans for UK-wide ‘not for EU’ product labelling will drive up costs and should be scrapped.
- Manufacturers are committed to growth, with 49% planning to increase their capital investment expenditure over the coming 12 months.