Following an increase to interest rates from 4% to 4.25% last week, BoE Governor Andrew reportedly told BBC’s Today Programme businesses should avoid putting their prices up as this would further fuel inflation.
However, UKHospitality chief executive Kate Nicholls said interest rates were “compounding the sector’s problems” and “squeezing” consumers disposable income.
She added: “We fully support the objective of reducing inflation, it is in all of our interests.
“To suggest the sector should stomach these staggering cost increases ignores the real and stark situation facing venues across the country.
Economic woes
“It is simply impossible if we want to have a viable hospitality sector left in a year’s time.
Figures from UKH show the sector is facing “immense pressure”, with energy bills double what they were last year and food price input inflation of over 20%.
In addition, UKH claimed energy bills could see a further 82% rise when support is reduced next week.
Nicholls continued: “No business wants to raise its prices, for fear of losing sales. We all want prices to be as low as possible for consumers, and it is a minor miracle that many have held off increases for as long as they have.
“The reality is that without adequate Government support, whether it is through energy, business rates or VAT, doing as the Governor asks will just mean business failure and job losses, compounding the country’s economic woes.”
Ludicrous suggestion
Furthermore, Night-Time Industries Association (NTIA) CEO Michael Kill claimed Bailey’s comments show how “disengaged” the country’s leadership is with the “reality” of what is happening at the ground level.
He added: “Is the Bank of England boss expecting businesses to just be consumed by debts and costs?
“An absolutely ludicrous suggestion, and poorly timed given the current climate across the sector.
“The irony is the reason businesses are having to consider price increases is because of the situation created by this country's leadership; the Government blew the opportunity to support the sector in the spring Budget.
“Without further support, businesses will have to do what is necessary to be sustainable, as the crisis is clearly not easing, and there is no end in sight.”
