More than half of hospitality businesses say they will be forced to take significant measures if next week’s Budget fails to provide meaningful financial support, according to new industry findings.
A national survey conducted on behalf of hospitality trade bodies shows that 58% of operators believe they will have no choice but to reduce staffing levels and/or raise prices unless the Budget includes targeted relief for the sector.
The warning, issued jointly by members of UKHospitality, the British Institute of Innkeeping (BII), the British Beer & Pub Association (BBPA) and Hospitality Ulster, comes at a time when the sector is already facing severe financial strain. Many businesses, workers and local communities continue to feel the effects of last year’s Budget, which left the industry grappling with rising costs and diminishing margins.
Survey data highlights the fragile state of the sector’s finances: nearly three-quarters (73%) of operators report having less than six months’ worth of cash reserves. Alarmingly, almost a third (29%) say they have no reserves at all — the highest level recorded to date.
Further insights from members reveal the scale of actions already taken. Half of all businesses have reduced their workforce, while 60% have cut staff hours. On average, available working hours have fallen by 8% compared with the same period last year. Additionally, 70% of respondents have increased their prices since April, following the introduction of £3.4 billion in additional annual costs, resulting in an average 5% rise.
Industry leaders say the escalating economic pressures demand immediate intervention. Businesses identify key Government actions that could offer meaningful relief, including the maximum available business rates discount (61%), reversing April’s employer NICs changes (54%) and implementing a VAT reduction (84%).
In a joint statement, the trade bodies said: “The situation facing our local pubs, neighbourhood restaurants and other hospitality venues is becoming increasingly perilous.
“Economic pressures are mounting at every turn and businesses have been forced to make tough decisions to cut jobs, reduce staff hours and put up prices. Many have already had to close the doors for the last time, leaving communities without the support local hospitality venues provide as a local hub.
“For those surviving, the situation is becoming more worrying. Cash flow is becoming a serious issue, with three-quarters of businesses with less than three month’s cash reserves. Those with no cash reserves – a critical safety net – has reached a record high.
“This is an urgent situation that demands urgent action at the Budget.
“No one wants to see jobs and communities hit even further, but it’s clear that they will once again be impacted if there is not adequate support for our sector at the Budget next week.
“Lower business rates, amendments to employer NICs and a cut to VAT are the measures that will deliver the relief and stability that hospitality desperately needs. We urge the Chancellor to act next week to protect cherished local venues, which support local jobs, economies and communities.”