Hospitality industry’s confidence plummets ahead of NI increase

Just 14% of hospitality leaders in the UK feel optimistic about the sector's prospects this year, according to the new Business Confidence Survey from CGA by NIQ. According to the poll, 33% of those surveyed feel optimistic about the prospect of their businesses specifically over the 12 months to come – an 8% decline on October 2024's pre-Autumn Budget figure of 41%, and the lowest figure since late 2022, when the industry was still reeling from the tail end of the Covid-19 pandemic, and the second lowest since its start almost five years ago. More dramatic still is the year-on-year drop in optimism for the sector as a whole, with the January 2024 figure of 41% feeling good about the future tanking to 14% in January 2025.

National Insurance

The biggest cause of consternation is the plan to lower the threshold for National Insurance contributions, due to drop from £9,100 to £5,000 per year this spring. The vast majority of those surveyed, a staggering 84%, said this would be a bad thing for business. From 6 April 2025, the National Insurance rate for employers will also rise from 13.8% to 15% – something which almost two-thirds (62%) of those surveyed said would negatively affect them. As a response to the Labour government's changes to National Insurance, 59% said they would have to cut costs by reducing the number of staff and 57% said they would do so by reducing employee benefits. 15% of the hospitality business leaders surveyed also said that they may be forced to close down locations as a consequence of the policy. A statement from trade bodies including UK Hospitality and the British Beer & Pub Association accused the government of "piling on costs" that would inhibit growth. "We want to work with Government so we can continue to vitally boost the economy, which is why we urge them to delay the changes to the employer NICs threshold," the statement argued. “They [hospitality businesses] have warned about potential lost earnings, lost jobs, reduced trading hours and, in some cases, business failure. This would mean the loss of essential community hubs that would otherwise drive the local economy and create jobs."