Chancellor’s Budget hangover leaves pubs in red
Rachel Reeves has been warned her tax hikes risk a wave of pub and restaurant closures as one in three hospitality firms are now loss-making.
The proportion of businesses in the sector in the red for the first three months of the year was a sharp increase on the previous quarter.
And six in ten firms said they have been forced to cut jobs to stay afloat, after £3.4billion in extra costs hit the industry in April.
That was according to alarming research from industry bodies including UKHospitality and the British Beer and Pub Association.
The survey also found that just over three in four operators have had to increase prices.
In a plea for Government help, the groups said: ‘Jobs are being lost, livelihoods under threat, communities set to lose precious assets, and consumers are experiencing price rises when wallets are already feeling the pinch.’
Struggle: Rachel Reeves has been warned her tax hikes risk a wave of pub and restaurant closures
They said it was ‘the first indication of the devastating effects of the changes that hit the sector in April’.
At her first Budget last October, the Chancellor whacked the sector with increases in employers’ National Insurance Contributions and the national minimum wage, as well as business rates changes, which all took effect in April.
The industry has called on the Government to help by reversing the NICs increase and offering a VAT cut on food and drinks sold in hospitality venues.
They also want to see the business rates system reformed.
The figures come as a separate gloomy report from the Confederation of British Industry (CBI) found private sector confidence is at its weakest since September 2022 – at the time of Liz Truss’s mini-Budget.
Alpesh Paleja, deputy chief economist at the CBI, said firms were looking to the Government to take ‘decisive action to restore business confidence and boost growth’ as it prepares to unveil its spending review and industrial strategy.
That was echoed by Make UK, which represents British manufacturers. In a separate report it urged Labour to pledge to slash industrial energy costs, which it said are now four times higher than in the US and 46 per cent above the global average.
Boss Stephen Phipson said: ‘If we do not address the issue of high industrial energy costs in the UK as a priority, we risk the security of our country. We will fail to attract investment in the manufacturing sector and will rapidly enter a phase of renewed de-industrialisation.’
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