Nealy half of food and drink manufacturers are cutting or pausing investment projects as they face record-high inflation and the UK economy shrinking.
The research from the Food and Drink Federation (FDF) suggests companies have seen input costs increase by an average of 21% over the past 12 months with a similar rise next year.
Figures from the Insolvency Service show that in the first eight months of this year, there were more insolvencies in the food and drink industry than during the whole of 2019.
One of the main pressures on companies is rising energy prices which accounts for 22% of a business costs and labour shortages which saw the vacancy rate rise to 9.1% in the third quarter.
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As a result, companies are now urging the Chancellor to provide economic and energy stability, prioritising measures that will drive growth and cut business costs.
The FDF said ways the government can help businesses is through tax incentives for capital investment, a reduction in the costs of moving goods from the UK and EU, as well as smarter regulation.
“Confidence levels in our industry are at an all-time low, with soaring energy and ingredient prices putting incredible pressures on businesses, which are at the same time making every effort to keep the price of everyday food and drink affordable,” FDF chief executive Karen Betts said.
“Our companies need reassurance that government understands the issues they are facing and will act to help our sector shore up its resilience. From incentivising investment in the transition to green energy and growth, to reducing the costs of burdensome regulation and helping companies manage energy price volatility.
“I hope the Chancellor will act decisively to support our sector next week. This will pay dividends in helping to manage inflation for hard-pressed households.”
