Two-thirds of UK hospitality businesses plan to cut jobs and one in seven will close, survey finds | Hospitality industry

Two-thirds of hospitality businesses are planning redundancies as a result of “stifling” government-imposed costs as new business rates and higher wage bills come into force.

Many pubs, restaurants and hotel companies will see their costs rise significantly from April 1 following Rachel Reeves’ changes to business rates and the increase in minimum wage thresholds announced in the Chancellor’s November budget.

An industry-wide survey of 20,000 hospitality businesses found that 64% of firms plan to cut jobs, 42% plan to reduce hours and one in seven will be forced to close as a direct result of cost increases.

“Hospitality businesses will face billions of pounds of additional costs come April, forcing many to make heartbreaking decisions,” the organizations, including UKHospitality and the British Beer and Pub Association, said in a joint statement. “The highest hospitality tax burden in the economy is suffocating the industry. The impact is clear: more job losses, less investment and business closures.”

UKHospitality estimates that increases in the “national living wage” and national minimum wage will cost the sector an extra £1.4bn.

While there is no estimate of the overall cost of the changes to business rates, a spokesman said most members expected to pay more, with the average hotel in England facing an increase of £28,900 more this year (a 30%) increase, while the average restaurant could expect a 15% increase of £1,800.

This comes despite the government announcing a support package worth more than £80 million a year for pubs and live music venues following a fierce backlash over the impact of the business rates revision.

Trade bodies, including the British Ulster Institute of Innkeeping and Hospitality, have also warned that conflict in the Middle East will accelerate the impact of rising wage and tax costs, with energy bills expected to rise rapidly.

Separate figures published by the Public Policy Institute on Wednesday showed Britain had the second-lowest level of business investment by private companies among G7 countries.

The think tank estimates that UK companies invest the equivalent of 11.1 per cent of GDP, falling well behind European countries such as Japan at 18.2 per cent, France at 12.7 per cent and Germany at 12 per cent.

The economic shockwave caused by war in the Middle East has pushed economic confidence to an all-time low, according to new figures from the Institute of Directors (IoD).

The IoD Index of Economic Confidence, which measures how optimistic business leaders feel about the prospects for the UK economy, fell to its lowest ever score of -76 in March. The IoD’s reading in February was -63.

The biggest drivers of cost increases over the next 12 months among business executives were listed as workers’ bills, supply chain inflation and energy.

“The outbreak of conflict in the Middle East has plunged business leaders’ confidence to a new record low,” said Anna Leach, the IoD’s chief economist. “The government is right to be alert to the risk of a new cost shock to the economy.”