UK firms strangled by taxes and red tape will struggle to compete with Europe
Andy Burnham is to meet EU leaders (Image: Getty)
Thousands of jobs could be put at risk by Andy Burnham’s food and drink deal with the EU. Industry leaders are pleading with the Prime Minister to cut costs for British manufacturers, with a warning that high UK energy bills and taxes make it impossible to compete with EU firms on a level playing field.
Mr Burnham is set to sign the deal, known as the Sanitary and Phytosanitary Agreement, at Friday’s historic Brussels summit. Food and drink manufacturing is the UK’s largest manufacturing sector, contributing £41.6billion to the economy and supporting 484,800 jobs. The Food and Drink Federation (FDA), which represents household names from Birds Eye to Weetabix Ltd, is backing the trade plan but urged the Government to support UK firms.
FDA chief executive Karen Betts said: “It’s important to note that trade opportunities go both ways. It’s currently cheaper to make food and drink in Europe than it is here, given the UK’s high energy and regulatory costs.
“The Government must act quickly to make the UK a more competitive place to run a food business, or we risk losing our strong domestic manufacturing base to Europe.”
Average electricity price paid by a medium-sized business in the UK was 25.85p per kWh in 2025, while in France it was 10.74p and in Spain it was 10.45, according to Government figures.
A study by the CBI found costs for food manufacturers rose 40% between 2020 and 2026, thanks to rising energy costs, higher prices for ingredients, increased taxation and a growing volume of regulatory requirements. In addition, government policies cost the industry £1.5billion, including higher Employer National Insurance Contributions and new taxes on packaging.
The FDA is also warning that firms must be given time to adapt to new EU laws before they come into force. FDA research has found more than 400 UK regulations will need to be brought into line with Brussels laws as part of the planned agreement.
Ms Betts said: “Brexit has had a major impact on food and drink manufacturers, with friction at the border driving extra costs and making it harder to do business with our largest trading partner. Making it easier to trade in food and drink is a welcome step for large and small businesses across our sector.
“However, aligning UK food laws and standards with the EU is a significant task. All UK food and drink manufacturers will need to comply with EU law whether or not they trade with Europe, and those laws have changed a good deal since Brexit.
“Businesses need adequate time to make a range of changes to their products and packaging, and they will need prompt and accurate guidance from government to do so. We also need to understand how the government will now influence the future shape of EU food law, to ensure the interests of food businesses in the UK are taken into account.”
The Government has already warned the food and drink industry to prepare to comply with EU rules covering everything from the amount of fruit contained in jam to the types of olive oil included in olive oil blends.
Eggs will need to be marked with a code showing where they were produced, while ultra-violet treatment will no longer be allowed in the production of mineral waters.
A Government spokesperson said: “We recognise that businesses are facing real pressures from global uncertainty and rising costs so from April 2027, the British Industrial Competitiveness Scheme will support over 10,000 eligible businesses and cut their electricity bills by up to 25%.
“Our proposed deal with the EU will add billions to the economy, and end the costly paperwork taxes which have pushed up food and energy costs for businesses and consumers alike.”