UK packaging industry faces rising costs and regulatory shifts in autumn budget

Chancellor Rachel Reeves’ recent autumn budget unveiled several measures with significant implications for the UK packaging industry, setting a complex and nuanced economic landscape. Central to the sector’s immediate concerns is the confirmed increase of the Plastic Packaging Tax (PPT) in line with inflation, alongside a 4.1% rise in the national minimum wage, and a £1.5 billion investment in skills development aimed at addressing labour shortages.

The PPT adjustment aligns with consumer price index (CPI) inflation from 2026–27, maintaining the fiscal incentive for packaging companies to integrate recycled content. This move reflects government efforts to encourage sustainability, yet industry voices express that inflation-linked rises alone fall short of catalysing the systemic change required. Robbie Staniforth, policy director at compliance specialist Ecosurety, emphasised that Extended Producer Responsibility (EPR) alone is insufficient, urging for robust fiscal instruments to underpin recycling and reuse innovation. Similarly, Roger Wright, waste strategy and packaging manager at Biffa, called for a progressive tax structure prioritising recycled materials over virgin plastics, advocating reforms that incentivise recycling infrastructure investment and bolster the UK’s transition to a low-carbon economy.

Alongside environmental policy, the budget’s social and economic measures present mixed reviews. The 4.1% hike in the national minimum wage to £12.71 per hour aims to support lower-income workers amidst persistent cost-of-living pressures. Industry leaders like Thomas Glendinning of Sovereign Labelling Machines highlight the dual challenge, higher wage costs demand greater automation to sustain operational viability. Luke Wilson, managing director at print and packaging firm FACER, views the budget as a blend of support and burdens, noting that rising labour costs and energy prices require manufacturers to sharpen efficiency and maintain agility in an uncertain market.

Skills development received a significant boost via a £1.5 billion package targeting apprenticeships, digital training, and AI-focused initiatives. Packaging strategist Gillian Garside-Wight notes this aligns with the sector’s pressing need for a skilled workforce, especially in engineering, design, and data roles crucial to productivity and sustainability. However, she warns of a tightening consumer spending environment due to frozen income tax thresholds and a projected rise in the overall tax take to 38% of GDP by 2030, which may depress demand and pressure margins across the sector’s value chain.

Some voices from the manufacturing and food sectors express concerns about pension reforms and the broader fiscal environment. Karen Betts, chief executive of The Food and Drink Federation, highlights worries that changes to salary sacrifice schemes could discourage retirement saving, potentially increasing future state costs. Meanwhile, Tim Croxsons of glass bottle supplier Croxsons critiques the budget for its lack of growth incentives, cautioning that tax adjustments and increased employer costs may dampen long-term business viability and undermine the UK’s global competitiveness.

From a policy perspective, Dr Colin Church of IOM3 underscores that while there is an encouraging focus on clean energy and advanced materials, the packaging and materials sectors await stronger recognition and support to meet the ambitious transition to a resilient, low-carbon economy. The budget’s commitment to consult on mandatory certification for mechanically recycled packaging and reform of the Packaging Waste Recovery Notes (PRNs) system is welcomed as steps toward greater transparency and accountability in packaging compliance.

Nonetheless, widespread sentiment from across the packaging supply chain is one of cautious realism rather than optimism. Emma Verkaik, CEO of the BCMPA, reflects the struggles of small and medium-sized manufacturers facing rising wage bills and reduced capital allowances, with many questioning the pace of economic recovery amidst job losses and inflationary pressures. Marketing specialist Jo Stephenson emphasises that despite the sector’s innovation and leadership, maintaining competitiveness hinges on sustained investment in skills and technology, areas vulnerable to the pressures of higher taxation and fiscal tightening.

The broader business environment is fraught with uncertainties. Retailers have warned that the budget risks exacerbating inflation, job cuts, and reduced investment, echoing the packaging industry’s unease about the economic outlook. As Chris Jordan of Exedrabridge notes, while the budget does not impose direct harm on the print and packaging sectors, the combination of external global headwinds and the UK’s productivity challenges presents a formidable hurdle.

In summary, Chancellor Rachel Reeves’ autumn budget delivers a mixed package for the UK packaging industry: supportive measures in skills and environmental policy, counterbalanced by rising costs and limited stimulus for growth. The industry is called to navigate a tightening economic context by accelerating innovation, investing in workforce development, and enhancing operational efficiency, all while adapting to evolving regulatory and environmental expectations in the journey toward industrial decarbonisation and sustainable circularity.