Food and drink manufacturers have suffered a ninth consecutive quarter of negative business confidence, with rising costs and mounting regulatory pressures continuing to weigh on the sector.
The latest Food and Drink Federation (FDF) survey found business confidence stood at -31% in Q2 2026, while 91% of manufacturers said business conditions were either unchanged or worse than in the previous quarter.
The pressure is also threatening future investment, with 87% of manufacturers not planning to increase spending on skills and 84% holding back on R&D investment over the next year.
Manufacturers are calling on the Government to ease the burden, with keeping minimum wage rises in line with inflation, cutting energy costs and reducing regulatory pressures among their key priorities.
FDF report mentions that the conflict in the Middle East has added cost pressures. During the first four months of the conflict, costs rose by 1.2% for large manufacturers and 6.3% for small businesses. Two-thirds of manufacturers have absorbed these costs, rather than passing them on.
As a result of growing cost pressure, investment in future growth is under threat. 87% of manufacturers aren't planning to increase spending on skills and 84% aren't planning to increase investment in R&D over the next year.
Growing UK sales remains the top priority for food and drink manufacturers, followed by developing new products and restructuring operations to remain competitive.
Manufacturers have identified the how they think the Prime Minister could east cost pressure. 75% want future minimum wage increases kept in line with inflation, 56% want action to reduce energy costs, and 50% want the government to limit regulatory burden.
FDF director of growth and sustainability Balwinder Dhoot said: “Rising costs and policy uncertainty are dampening investment, so it’s no wonder that the mood among food and drink manufacturers has been persistently low.
“Especially with extreme weather conditions putting increasing price pressure on businesses, Andy Burnham and his team need to set a new direction for the food system and demonstrate that they take the nation’s food security seriously.”