UKHospitality has renewed calls to cap business rates increases and reduce VAT rates following inflation figures released yesterday (14 February).

While inflation held steady at 4% in January, CEO Kate Nicholls reiterated that costs continue to rise, with businesses forced to pass them on to consumers – risking an inflationary spike in April and the following months as business rates increase.

Her comments come as the UK GDP fell 0.1% in December according to ONS data released today (15 February), following a 0.2% rise in November.

GDP was down 0.3% over the three months to the end of December, a second consecutive quarter of negative growth, pushing the UK into a technical recession.

Nicholls said: “The rate of inflation not increasing, as widely expected, is positive but let’s not forget that this still means prices are continuing to rise. Hospitality businesses are continuing to feel the brunt of these costs, with food, drink and energy all continuing to rise at a rapid rate.

“With business rates set to increase by 6.7% and the National Living Wage rising in April, venues will be hit once again by a tsunami of additional costs. Unfortunately, the vast majority of businesses have absorbed all they can and are now forced to pass these onto consumers.

“If the Government wants to avoid the risk of an inflationary spike in April and the following months, it should take action at the Budget to cap business rates increases and reduce the rate of VAT for hospitality.”

Reacting to the news of the UK entering a recession, she added: “The economy officially entering a technical recession is hugely concerning. Consumer confidence has already taken a huge hit over the past year as the cost-of-living crisis bites and today’s news will dent it even further.

“That will be a big worry for hospitality businesses up and down the country, as they need support from consumers more than ever. 

“As we head towards the Budget, I’d urge the Chancellor to look to hospitality as a sector that has a proven track record of driving growth and stimulating demand in the economy.

“Introducing a lower rate of VAT for hospitality and capping business rates increases would allow venues to reduce those incredibly high business costs and keep price rises at bay – that would be good for the public, businesses and the economy.”

Emma McClarkin, CEO of the British Beer and Pub Association, also called for reform of the business rates system and VAT reduction, adding that the industry needs ‘vital cuts’ to beer duty.

McClarkin said: “The continuation of inflation at 4% in January will do nothing to alleviate the significant pressure on the beer and pub sector that long ago ran out of room to absorb cost increases while also staying in business. Despite this, brewers and pubs have done everything in their power in the last 18 months to keep their prices down and keep a pint at your local affordable.

She added:  “Today’s official figures indicating that the U.K. economy is in recession is extremely worrying and indicates that there will be no let up in the pressure facing the beer and pub sector. It underlines the importance of the Chancellor loosening the economic vice grip on breweries and pubs by cutting beer duty, capping business rates and introducing a pub specific VAT rate at the Spring Budget in just over two weeks.”

The Night Time Industries Association (NTIA) criticised the ‘profound and systemic marginalisation’ of the nightclub sector, with 396 nightclubs – 31% of the total sector – forced to close between March 2020 and December 2023.

NTIA CEO Michael Kill commented: “The marginalisation of nightlife businesses has left them feeling neglected, questioning the Government’s motive, with limited avenues for survival. As we navigate recovery, it’s imperative that policymakers acknowledge the vital role of these establishments and provide the support they urgently need.”