Interest rate rise will 'exacerbate financial challenges'
The BoE today (Thursday 3 August) announced interest rates would rise by 0.25% to 5.25%, marking the 14th successive rates increase, in a bid to meet inflationary targets.
UKHospitality (UKH) chief executive Kate Nicholls said: “Hospitality businesses are particularly exposed to further rate rises, due mainly to the Covid loans many were forced to take out during the pandemic.
“Yet another rise in interest rates only exacerbates the financial challenges many are grappling with, alongside high energy costs, food and drink inflation and labour shortages.
Inflationary pressures
“The inflationary pressures we’re facing as a nation are supply, not demand, led so we need to see urgent Government action to bring down these business costs.”
Nicholls added “rapid implementation” of the recommendations made by energy regulator Ofgem last week, including a non-domestic market review, would be a “good starting point” to bring down costs.
She continued: “We would also urge flexibility on loan repayments, including extension to terms, options to move to interest-only payments or delay altogether, and flexible arrangements from HMRC for tax payments.”
This comes as the latest figures from the Office for National Statistics (ONS), released earlier this month, estimated the headline rate of inflation stood at 7.9% as of June 2023, while food inflation hit 17.4%.
Removing limitations
While both estimations were down compared with June 2022, British Beer & Pub Association (BBPA) chief executive Emma McClarkin said hospitality firms were “not out of the woods yet”.
In addition, the sector saw the changes to alcohol duty implemented earlier this week while the cost of a pint of draught lager was recently shown to have soared by 12% in the year to June 2023, according to data from ONS.
Night-Time Industries Association (NTIA) CEO Michael Kill said: “Given the inflationary position announced several weeks ago, we are disappointed the BoE have once again increased interest rates.
“Our industry can play a big part in supporting the Government in bringing down inflation if we are given the platform to trade.
“The Government needs to tackle some of the short-term barriers to investment and growth, getting a handle on energy, food and drink costs, tackling sector workforce shortages and removing limitations to trade through deregulation.”
