UK recycling infrastructure under pressure amid rising costs and policy changes

UK infrastructure should be primed to support a wave of policy initiatives that may increase demand to recycle flexible plastic packaging domestically, according to David Gudgeon, head of external affairs at Eurokey, a brand by Reconomy, the international circular economy specialist.

These policy initiatives include Packaging Extended Producer Responsibility (EPR), the Plastic Packaging Tax and Simpler Recycling. While these reforms aim to improve consistency in collections and shift incentives across the value chain, the UK remains heavily reliant on exporting plastic material due to the lack of domestic infrastructure. Latest government data shows that only around half (51%) of plastic packaging is recycled in the UK.

UK recycling infrastructure is enduring a prolonged period of decline as operators face severe cost headwinds including rising energy and transport costs, alongside competition from cheaper virgin plastics and overseas markets. According to the British Plastics Federation, in 2022 the UK’s plastics recycling capacity was 1.1 million tonnes and, in the period to January 2025, an estimated 260,000 tonnes per year of recycling capacity was lost.

The UK is losing out considerably from this lack of capacity. There is strong domestic demand for high quality recycled material, but much of this material continues to be exported for processing. This not only reduces the value of materials captured by UK businesses, but also increases costs and carbon emissions associated with transport.

While there is extensive legislation in place to drive demand for recycling, there is a need to accelerate policy changes to stimulate investment in UK infrastructure. Specifically, the government should expedite its reforms of the PRN/PERN system that aim to level the playing field between UK domestic reprocessors and exporters and encourage more packaging waste to be processed domestically. This could create certainty of supply and demand, which is critical to unlocking private investment in new capacity. 

David said, ‘With heightened geopolitical volatility, the battleground over accessing dwindling critical minerals is fiercer than ever as governments race to shore up supply to support key industries such as defence and to fuel the AI boom. Recycling and circularity have an instrumental role to play in boosting economic resilience against further shocks by ensuring valuable resources remain in circulation. 

‘In this challenging environment, the government should expedite existing reforms to strengthen the UK’s recycling sector, which will deliver immediate economic benefits, support investment and job creation, and help businesses decouple growth from virgin resources while lowering costs and carbon emissions.’