The Bank of England (BoE) yesterday (Thursday 11 May) increased base interest rates by 0.25 percentage points, from 4.5% to 4.5% in a bid to meet inflation targets, reportedly the highest level for almost 15 years.
UKH chief executive Kate Nicholls said: “Interest rates reaching [these] levels will be a huge worry for hospitality businesses and could significantly impact business viability.
“Hospitality was the business sector most affected by the pandemic, with a large number of businesses forced to take out loans to survive.
Perfect storm
“With those loans now due, consistently rising interest rates compound debt and inflict further economic pain on venues.”
This comes as data from the Office For National Statistics (ONS) today (Friday 12 May) revealed the UK economy grew 0.1% in Q1 2023, despite a 0.3% decline in March following no growth in February and a 0.5% increase in January.
In addition, the most recent figures from ONS also showed the headline rate of inflation saw a 10.1% upswing in the 12 months to March 2023 as food costs soared by 19.2% during the same period, the highest annual rate for more than 45 years, and draught beer prices rocketed by 11.9%.
Many have described the ongoing cost-of-doing-business crisis as a “perfect storm” amid onerous energy prices on top of continued rail strikes, rising costs, business rates, VAT and cost-of-living pressures as many companies face closure.
Price pressure
According to data from real estate intelligence firm Altus Group, as of March 2023, more than 150 pubs had already been lost from English and Welsh communities this year.
Nicholls added: “Loan repayment is not the only price pressure businesses face, with the sector now in a period of peak energy pain.
“Urgent action is needed from Government to bring costs down, particularly on energy, and more needs to be done to assist businesses in their pandemic debt.
“We would urge HMRC to be lenient in their demands from businesses at this point, allowing time to pay arrangements.”
