Export Decline Amid Rising Trade Costs
The UK food and drink manufacturing sector is facing significant headwinds as exports fall to their lowest levels in a decade. New data from the Food and Drink Federation (FDF) reveals that exports dropped by 4.8% year-on-year to £5.7 billion in the first quarter of 2026. In volume terms, shipments fell by 8.9%, marking the weakest performance for the period in ten years, excluding the pandemic-impacted figures of 2021.
Industry leaders attribute the decline to a combination of persistent post-Brexit trade complexities and escalating international tariff barriers. Exports to the European Union, the UK’s largest trading partner, saw a 6.9% decline in volume, which the FDF explicitly links to the ongoing costs and bureaucratic friction introduced by the post-Brexit trading relationship. While the UK and Brussels are currently negotiating a new sanitary and phytosanitary (SPS) agreement aimed at reducing border paperwork, the immediate impact on producers remains significant.
US Trade Surplus Collapses
The most acute pressure is currently being felt in trans-Atlantic trade. The UK’s food and drink export surplus with the United States has plummeted by over 69%, falling from £359 million in Q1 2025 to £110 million in Q1 2026. This stark contraction was driven by a 27.9% drop in UK exports to the US, paired with an 11.5% increase in US food and drink imports into Britain.
The FDF warns that this trend is likely to persist as UK manufacturers grapple with domestic cost pressures—including energy, employment, and regulatory compliance—that exceed those of many global competitors. Furthermore, the federation highlighted concerns regarding proposed UK government tariff suspensions. These measures are expected to lower costs for US companies exporting goods such as chocolate, biscuits, and preserves into the UK, while UK manufacturers continue to face higher barriers when attempting to access the US market.
“Food and drink businesses are part of the fabric of every community in the UK, and it’s concerning to see them struggling to compete overseas,” said Karen Betts, chief executive of the FDF. “The costs of producing food and drink in the UK are higher than in many competitor economies, from energy to employment, and constantly changing regulation only adds to these.”
Broader Economic Context
The FDF is calling for targeted government intervention to support small and medium-sized enterprises (SMEs) within the sector, suggesting that better access to trade deal benefits and a reduction in the overall cost of doing business could help restore competitiveness. This downturn in manufacturing trade arrives as the broader UK economy monitors a series of critical indicators, including Eurozone inflation expectations, Italian business confidence, and US consumer sentiment data, all of which continue to influence market outlooks.
