Food sector invests to secure post-Brexit growth

Food and drink firms in England and Wales have raised their growth forecasts since the EU referendum in June, and many have started to invest.

According to a new survey of 100 companies by Lloyds Commercial Banking, pre-referendum pessimism has turned to optimism, with firms eager to shrug off any uncertainty and move ahead with their plans to enter new UK markets and develop products.

The industry forecasts 19% growth in the next five years, up 3% from 2015, and it plans to create more than 75,000 new jobs.

See also: Food industry fears loss of eastern European workers

The research is the first study of the sector following the UK’s referendum vote to leave the European Union.

Just over half (52%) of firms said the build-up to the EU referendum had had a negative effect on their business.

But post-referendum, almost half (44%) said planned investment had increased since the vote result – twice as many as the 22% which said it had fallen.

A small majority of businesses also said their expectation of growth was higher now that the vote had been held.

Customer base

Andrew Naylor, head of agriculture for Lloyds Bank, said: “This report holds some important clues for the farming industry about where its main customer, our domestic food and drink sector, is heading.

“Of particular interest are plans around export and expansion, which have understandably been pared back this year.”

Despite this, since the EU referendum, 30% of companies said they were focusing their growth on export markets.

However, there has been a marked shift in the target destination, with 47% aiming to sell to the EU (down from 60% last year), while 33% now plan to target eastern Europe and Russia (up 22% on last year).

“It’s also interesting to note that oil prices and agricultural price volatility are no longer seen as such a threat, while the sugar tax is,” said Mr Naylor.

“Together, these findings present opportunities for farming to work with its customers and their supply chains to find ways to capitalise.”