Northern England food and drink sector faces economic uncertainty

The food and drink sector in Northern England is facing significant economic uncertainty despite its substantial scale. Yorkshire remains a major industry hub, with a supply chain generating over £3.8 billion in GVA and supporting approximately 67,000 jobs. Additionally, the North West sector is expanding rapidly, accounting for about 15% of total UK food production.

However, industry confidence has declined sharply. The Food and Drink Federation’s confidence measure dropped to -64% in the first quarter of 2026, down from -31% at the end of 2025. Key challenges include rising production costs driven by fertilizer and fuel prices, shipping route disruptions, and changing consumer behavior.

Rising labor costs due to the National Living Wage have led 53% of businesses to consider automation. While automation may offer long-term capacity, it requires significant capital investment at a time when rising costs are squeezing profit margins and limiting available reserves.