Hospitality sector faces job cuts amid April cost hikes

Rising tax and business rate costs in the UK could force more than 70% of hospitality businesses to cut jobs, scale back investment, or reduce trading hours.   The joint survey by leading hospitality trade associations highlights concerns over rising operational costs. Key findings include:

• 70% of businesses anticipate reducing employment levels, risking job losses and income reductions for workers.
• 60% plan to cancel planned investments.
• 29% intend to reduce trading hours.
• 25% report having no cash reserves left, a six-percentage-point increase since October 2024.
• 15% believe they will have to close at least one site.

The survey underscores the sector's role in economic growth, with hospitality being a top contributor to GDP in November and December 2024. As a result, trade bodies are urging the government to delay changes to the employer National Insurance Contributions (NICs) threshold to prevent immediate impacts on jobs and investment. In a joint statement, the associations said: "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, which will have damaging impacts on businesses, jobs, and communities." The news follows a report by db indicating that only 14% of UK hospitality leaders feel optimistic about the sector's prospects this year, a significant drop from 41% in January 2024. The planned reduction of the National Insurance threshold from £9,100 to £5,000 per year and an increase in the employer rate from 13.8% to 15% are major concerns, with 84% of those surveyed viewing these changes negatively.

'The last thing the Government should be doing'

The BBPA emphasises the need for government collaboration to delay the NICs threshold changes, allowing the hospitality sector to continue contributing to economic growth and supporting local communities. “At a time when hospitality has been one of the top contributors to economic growth, the last thing the Government should be doing is piling on costs that will impact employment and cut off our ability to grow," the BBPA said in a statement. It continues, “Our message to Government is to delay its changes to the employer NICs threshold and allow hospitality to continue to deliver economic growth, regenerate our high streets and support local communities.”