U.K. Hospitality Sector Faces Employment Crisis Amid April Cost Increases

A survey by UK hospitality trade associations predicts that 70% of businesses in the sector may have to cut jobs due to increasing employment costs and reduced rates relief starting in April.

A recent joint survey conducted by leading hospitality trade associations, including UKHospitality, the British Beer and Pub Association, the British Institute of Innkeeping, and Hospitality Ulster, revealed that the sector is deeply concerned about the potential impact of new employment costs and a reduction in rates relief scheduled to start in April.

The figures from the survey indicate that 70% of hospitality businesses fear they will need to reduce their employment levels, posing a significant risk of job losses and lost income for workers. Additionally, 60% of businesses surveyed said they would have to cancel planned investment, 29% would reduce trading hours, 25% reported having no cash reserves left (an increase of six percentage points since October 2024), and 15% believe they may have to close at least one site.

These trade associations, representing a sector that was one of the top contributors to GDP growth in November and December 2024, highlight the potential negative impact of these changes on a sector critical to the UK’s economic growth. They suggest that delaying changes to the employer National Insurance Contributions (NICs) threshold could help mitigate the immediate impact on jobs and investment revealed in the survey.

When asked how the government could support the sector, businesses primarily cited two measures: a reversal of employer National Insurance Contribution changes, and a lower rate of VAT for hospitality.

In a joint statement, the trade associations warned of the potential impact of these changes: “These figures should serve as a clear warning that pubs, brewers, and hospitality venues will be forced to make painful decisions to weather these new costs. This will have damaging impacts on businesses, jobs, and communities. We want to work with the government so we can continue to vitally boost the economy. We urge them to delay the changes to the employer NICs threshold. This would help save jobs and allow the sector to continue growing.”

The survey, conducted by CGA by NIQ in January 2025, included responses from businesses representing 8,300 sites. The findings underscore the potential economic impact and challenges the hospitality sector faces amid these new costs and changes. The call for government action reflects the sector’s collective concern about maintaining growth and employment levels under the impending financial strains.