UK food and drink trade deficit reaches record high of £21bn

The trade deficit for the United Kingdom’s food and drink sector has expanded to more than £21bn, marking the largest gap between exports and imports since 2000. Industry leaders have described the figures as a critical warning sign, urging the government to prioritise the protection of domestic agricultural production. They argue that safeguarding homegrown produce is essential for national security, particularly amidst a backdrop of geopolitical instability and shifting global trade dynamics.

Analysis by the Food and Drink Federation indicates that export volumes fell by 11.7 per cent in the first half of 2026, dropping to four billion kilograms. This level of output is only marginally higher than the lows recorded during the height of the pandemic and following the 2001 foot and mouth disease outbreak. The decline has been driven by a combination of factors, including the ongoing costs associated with trading with the European Union post-Brexit, conflict in the Middle East, and new tariffs imposed by the United States.

Exports to the EU continued to suffer, with values decreasing by 0.9 per cent due to the additional complexity and costs of cross-channel trade. The drop in sales to markets outside the EU was more pronounced, falling by 6.9 per cent in value terms. This decline was partly attributed to disruption in the Middle East, where exports to the United Arab Emirates fell by nearly a quarter following the US-Israel war on Iran. Furthermore, the introduction of a 10 per cent import tariff by the US resulted in a 16.5 per cent decrease in cross-Atlantic sales.

Conversely, imports reached 19.1bn kg in the first half of the year, the second highest volume ever recorded. Imports from outside the EU have increased by more than a fifth since 2023, a trend accelerated by the easing of restrictions through new trade agreements. Australia, for instance, now sends 25 per cent more goods to the UK in value terms than a year ago, including meat, oils, vegetables and whisky. Domestic import levels have also been boosted by the suspension of tariffs on manufactured foods such as chocolate and biscuits, a measure introduced by former chancellor Rachel Reeves to ease the cost of living. EU producers have also increased their deliveries to the UK, with values rising by 0.8 per cent year-on-year.

Tom Bradshaw, president of the National Farmers’ Union of England and Wales, stated that the widening deficit underscores the need for a long-term strategy to support British production. He emphasised that food security is intrinsically linked to national security and warned that farm businesses face immense pressures from rising costs, regulatory burdens and extreme weather. He called on the government to create conditions that allow businesses to invest and innovate with confidence.

Karen Betts, chief executive of the Food and Drink Federation, noted that the sector is facing significant and growing pressures from rising energy, ingredient, transport and labour costs. She highlighted the stark questions regarding food security posed by the current trade imbalance, particularly in a world affected by conflict and climate change. Betts criticised the decision to remove tariffs on imported goods, noting that it leads to foreign products being sold more cheaply than those produced domestically.