UK Hospitality Business Confidence Hits Two-Year Low Amid Looming Cost Increases

The UK hospitality sector’s confidence has nosedived to its lowest level in two years since October 2022, influenced by impending cost increases scheduled for April. Research conducted by CGA for NIQ’s Business Confidence survey unveils that a mere 14% of businesses exhibit optimism about the hospitality market due to these forthcoming costs.

UKHospitality, in anticipation of the Spring Statement, has underscored the urgent need to postpone the cutback in the employer National Insurance Contributions (NICs) threshold. The adjustment to employer NICs is projected to cost the sector an extra £1 billion per annum. Furthermore, it will likely bring 774,000 hospitality team members, accounting for 20% of the sector’s workforce, into the threshold for the first time.

UKHospitality has also urged the government to maximize the business rates reform discount for hospitality businesses. This appeal aligns with the government’s intention to level the playing field for high street businesses. The organization also proposed that large hospitality businesses be exempted from the surcharge.

Other suggestions from UKHospitality to the government include accelerating the promised apprenticeship levy reforms. They have also recommended incorporating the hospitality sector into the first wave of foundation apprenticeships. Lastly, they have called for creating a hospitality growth strategy and action plan.

Kate Nicholls, the Chief Executive of UKHospitality, shared her insights on the matter. She expressed that the hospitality sector is facing a crisis of confidence that hasn’t been seen since the full-blown energy crisis and a soaring inflation rate of over 10%. The enormity and unprecedented nature of the simultaneous costs imposed on venues are entirely unsustainable for many.

Nicholls further warned that these fiscal pressures could force businesses to cut jobs, halt recruitment, cancel planned investments, reduce trading hours, and close their doors for good in severe cases. She cautioned that while these tax increases might result in substantial receipts for the Treasury, they would also negatively impact the economy, jobs, communities, and the government’s growth drive.

Finally, Nicholls implored the Chancellor to act promptly by delaying the changes to the employer NICs threshold. She believes this action would mitigate much of the hardship and allow the hospitality sector to continue its growth trajectory.