The UK’s recycling sector is facing mounting pressure as major policy reforms come into effect alongside severe operational cost headwinds. According to an analysis by experts at Eurokey, a brand by the international circular economy specialist Reconomy, the prolonged decline of domestic infrastructure leaves the country heavily reliant on exporting valuable plastic waste. To stabilize the market and unlock private investment, urgent acceleration of regulatory reforms—particularly the PRN/PERN system—is required.
Missed Opportunities and Export Dependency
David Gudgeon, Head of External Affairs at Eurokey, states that the UK infrastructure should be primed to support a wave of policy initiatives expected to increase the demand to recycle flexible plastic packaging domestically.
While the government has introduced new initiatives such as Packaging Extended Producer Responsibility (EPR), the Plastic Packaging Tax, and Simpler Recycling, the anticipated breakthrough has yet to materialize. Although these reforms aim to improve consistency in collections and shift incentives across the value chain, the lack of domestic infrastructure means the UK remains heavily reliant on exporting plastic material overseas. This is supported by the latest government data, which shows that only around half (51%) of plastic packaging is currently recycled within the UK.
Quantitative Data: Shrinking Domestic Capacity by the Numbers
The UK recycling infrastructure is enduring a prolonged period of decline driven by severe cost headwinds. Operators are simultaneously battling rising energy and transport costs, alongside fierce competition from cheaper virgin plastics and overseas markets.
Data from the British Plastics Federation paints a stark picture of this capacity reduction:
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In 2022, the UK’s total plastics recycling capacity stood at 1.1 million tonnes.
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In the period up to January 2025, an estimated 260,000 tonnes per year of recycling capacity was permanently lost.
This lack of capacity results in a considerable national economic loss. Despite strong domestic demand for high-quality recycled material, much of this resource continues to be exported for processing. This practice not only reduces the value of materials captured by UK businesses but also significantly increases costs and carbon emissions associated with transport.
The Key to the Solution: Regulatory Reform and Economic Resilience
While extensive legislation is already in place to drive demand for recycling, policy acceleration is necessary to stimulate investment in domestic infrastructure. The report specifically highlights that the government should expedite its reforms of the PRN/PERN (Packaging Recovery Note / Packaging Export Recovery Note) system. This move would level the playing field between UK domestic reprocessors and exporters, thereby encouraging more packaging waste to be processed domestically. Such a reform would create the certainty of supply and demand that is critical to unlocking private investment for new capacities.
David Gudgeon also pointed out the broader, geopolitical dimensions of the situation: “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 conclusion, the Eurokey expert emphasized that expediting existing reforms to strengthen the UK’s recycling sector would deliver immediate economic benefits. It would support investment and job creation, and help businesses decouple growth from virgin resources while simultaneously lowering operational costs and carbon emissions.
References and Sources:
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Original Analysis/Source Text Provided: Eurokey / Reconomy: UK recycling infrastructure under pressure amid rising costs and policy changes (May 13, 2026).
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Referenced Data Sources in Text: Latest UK Government Data (2026); British Plastics Federation report (2022-2025).
