‘Case for targeted Gov intervention now clear & urgent’

The Business Confidence Survey from CGA by NIQ showed four in 10 (41%) felt confident about the market over the next 12 months – an eight percentage point slump from October (49%).

Furthermore, the proportion of leaders who felt optimistic about their own business prospects in the next year also dropped from 62% in October to 57% now.

The poll also revealed 9% of leaders believed their business was at risk of failure this year, which was four percentage points more than October 2023 while 10% said their organisation had no cash reserves.

More than a third (36%) of respondents said wage costs had increased while 62% said they had significantly increased in 2023.

Almost half (48%) said food, drink and other bought in costs rose and 50% significant increased.

Support asks

Many also reported hikes in energy (81%), while 80% said insurance and 47% had rent rises.

On average, energy and pay costs soared by averages of 34% and 10% respectively. Respondents also reported average vacancy rates of 10%.

Nearly all of those surveyed (99%) were concerned by the upcoming national living wage rise, 95% by business rates, food and drink cost inflation (98%), interest rates (84%) and VAT (84%).

Their top three priorities for support in next month’s Budget were a VAT cut, business rates reform and a permanent lowering of the business rates multiplier.

CGA by NIQ director Karl Chessell said: “Hospitality is a resilient and resourceful sector but the years of Covid restrictions and high inflation have taken a major toll.

“This survey shows how confidence, profit margins and reserves have all been eroded and many operators, especially smaller ones, are now extremely vulnerable.”

Kickstart recovery

He added: “Costs of doing business have soared in every area and the case for targeted Government intervention is now clear and urgent.

“Without relief on tax, rates and the impact of inflation on key inputs, more businesses will be set to the wall. Hospitality can kickstart the UK’s recovery from recession​ but only with the right support.”

UKHospitality previously called on the Government to deliver its three key priorities for 2024​ – root-and-brand business rates reform, a lower rate of VAT and apprenticeship levy reform.

Chief executive Kate Nicholls added: “This knock to business confidence, no doubt underpinned by the relentless cost pressures operators are facing, is yet another demonstration of why the Government must take action in next month’s Budget.

“It is clear from these results hospitality is united behind our asks of the Government to lower VAT for the sector and to address looming business rates increases.

“We’re continuing to make representations on behalf of the sector at the highest levels of Government and I hope the Chancellor acts on 6 March.”