UK food and drink exports fall as US tariffs and Brexit trade friction bites – business live

Key events

Goldman Sachs: Very strong El Niño would push up food prices

The food industry also faces the threat of climate change, with forecasts of a “very strong” El Niño this year.

Goldman Sachs have predicted that global food commodity prices would be pushed higher, with a delay, if predictions that the El Niño detected in the tropical Pacific is unusually intense.

They say:

We find a 1.0°C El Niño shock drives a 9.55% peak increase in global wholesale food prices after two years. Scaled to the expected 2026 “very strong” event (implying a 1.65°C temperature increase), our model projects a cumulative 15.8% surge in food commodity prices, fully realised by 2028H2.

However, this would probably only result in a 1.3% rise in food, alcohol, and tobacco prices in the eurozone, Goldman estimates, and only a small rise in headline inflation.

El Niño is the term for a rise in ocean surface temperatures off the coast of South America, which has a dramatic impact on the global climate and can lead to heatwaves, crop failure and famine.

Asia-Pacific markets fell heavily today, as news of price rises from Apple hit the tech sector.

South Korea’s KOSPI index fell 6% and Japan’s Nikkei lost 4.15%, as technology shares continued to drop.

Apple’s decision to raise iPad and MacBook prices, and pass on higher costs of memory and storage chip costs, hit some semiconductor stocks.

Investors were also jolted by reports that artificial intelligence pioneeer OpenAI is considering holding off on its public debut until next year.

That knocked shares in SoftBank, an OpenAi investor, down by 12.5%.

Volkswagen CEO 'aims to cut up to 100,000 jobs in next years'

German carmaker Volkswagen is reportedly planning to cut up to 100,000 jobs over the next few years, as it intensifies its shake-up.

German monthly business publications Manager Magazin says Volkswagen CEO Oliver Blume is planning to drastically intensify job cuts, and close four German plants.

Blume is also planning to spin off the VW brand into a new company, they add.

Back in March, Volkswagen was expected to shed 50,000 jobs by the end of the decade, after being hit by falling sales in China and North America, and US tariffs.

The oil price is easing back this morning, after jumping following an attack in the strait of Hormuz.

Brent crude is down 2.3% today at $73.53 – still above yesterday’s four-month low of $72.06, lower than before the Middle East conflict began.

Taiwan’s Evergreen Marine has said one of its ship was hit close to Oman by an “unknown object” while on a route recommended by the British navy agency UKMTO.

This has prompted the UN’s International Maritime Organization to pause its operation to escort ships through the strait.

Britain’s electricity grid operator issues system warning due to heatwave

Energy news (2): Britain’s electricity grid operator has warned that the power supply could be squeezed tonight, as the country continues to swelter.

The National Energy System Operator (Neso) has issued an Electricity Margin Notice (EMN) for this evening – a sign that it fears a power supply crunch, and wants producers to provide more energy.

NESO’s forecasts are showing tight margins on the electricity system for Friday night, a spokesperson says, adding:

This is due to the impact of extremely high temperatures affecting Great Britain and the continent.

“An Electricity Margin Notice (EMN) has been issued to the market. This is a routine tool, and means we are asking market participants to make any additional generation capacity they may have available.”

On Wednesday, NESO issued an EMN, and then cancelled it after agreeing to pay around £10m to fire up gas power plants.

Demand is high in the evenings as people turn on electric fans and air conditioning units to try to keep cool.

UK's Ofgem advances 16 long-duration energy storage projects

Energy news (1): Regulator Ofgem has announced it is giving a “provisional green light” to 16 long-duration energy storage projects that could strengthen domestic power supplies.

The selected projects cover four technologies – pumped storage hydro (PSH), compressed air energy storage (CAES), lithium-ion batteries and vanadium redox flow batteries (VRFB).

Energy minister Michael Shanks, says:

“Forty years after the country’s last pumped storage facility, this government is getting Britain building again.

“The lesson from the conflict in Iran is clear: Britain cannot afford to remain at the mercy of volatile fossil fuel markets and leave families exposed to the next price shock.

“That is why we are further and faster in delivering the clean power mission by rolling out a new generation of pumped hydro storage and state-of-the-art batteries - making more of the clean, homegrown power we already produce, cutting waste, lowering bills and strengthening our energy security.”

Heathrow forecasts drop in passengers this year

Heathrow Airport has warned that passenger numbers could fall this year, due to the Middle East crisis.

In its latest investor report, released this morning, Heathrow says its base case is that it will handle 83.6m passengers this year, a 1.1% fall compared with 2025.

It says the outlook remains uncertain, despite ‘resilient’ demand so far this year, explaining:

In the 5 months to May 2026, passenger numbers reached 32.8 million, a 0.7% increase year on year, driven by larger aircraft and a boost in connecting passengers, although the ongoing conflict in the Middle East is putting notable downward pressure on traffic.

Heathrow says this forecast reflects the risk that continued volatility in the Middle East could dampen global travel demand over the rest of the year.

It has also lowered its earning forecast, predicting that profits on an adjusted EBITDA basis will fall by £147m compared to 2025, and be £60m lower than predicted in December.

The FDF also reports that the UK’s food and drink export surplus with the US has fallen by over 69% – from £359m to £110m in Q1 2026.

This was driven by the 27.9% drop in UK exports to the US, and also by a 11.5% rise in US food and drink exports into Britain.

The FDF fears this trend will continue, warning:

The US are also set to benefit from proposed tariff suspensions announced by the UK government this year, which would make it cheaper for US businesses to export products like chocolate, biscuits, jams and spreads to the UK, while UK manufacturers face higher costs sending products to the US, meaning this trend is likely to persist.

UK food and drink exports hit by US tariffs and Brexit trade friction

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

UK food and drink manufacturers are losing ground to global competitors, the industry fears, after exports fell to the lowest in a decade.

The Food and Drink Federation’s (FDF) latest Trade Snapshot report shows that UK food and drink exports fell by 4.8% year-on-year, to £5.7bn, in the first quarter of this year.

In volume terms, exports in January-March were down 8.9% to the lowest level for the period in the last decade (if you exclude 2021 when the Covid pandemic hit shipments), the FDF warns.

Ten years on from the Brexit referendum, it’s notable that EU export volumes fell by 6.9%, which the FDF blames on “the added cost and complexity of trading with our closest trade partner since Brexit”.

The federation hopes that the new sanitary and phytosanitary (SPS) agreement being hammered out by London and Brussels will cut some trade friction, by removing paperwork and reducing border checks.

But the biggest damage has been inflicted on exports to the US, which tumbled by 28% after Donald Trump’s trade wars disrupted transalantic trade.

Karen Betts, chief executive at The Food and Drink Federation (FDF):

“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. The UK produces world-class food and drink, drawing on our heritage and our reputation for innovation, but we have to be able to remain competitive overseas against local products. 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.

“There is plenty government can do to improve the competitiveness of our food and drink exporters, many of which are SMEs, from helping companies to access the benefits of trade deals to lowering the cost of doing business in the UK.

The agenda

• 9am BST: Eurozone consumer inflation expectations report

• 10am BST: Italian business confidence data

• 3pm BST: University of Michigan’s US consumer confidence index