- Hospitality companies have warned the Budget could lead to more job cuts
Britain’s pubs, restaurants and hotels experienced the fastest increase in costs of any business sector last month, after being hit by tax and wage changes in October’s Budget.
Tourism and recreation companies also implemented the steepest price hikes of any industry monitored, according to the latest Lloyds UK Sector Tracker.
Hospitality firms and trade bodies have warned that the Labour Government’s Budget could lead to more job cuts and venues closing.
Chancellor Rachel Reeves announced that the rebate enjoyed by hospitality operators on their business rates bills would be reduced from 75 per cent to 40 per cent, with discounts capped at £110,000 per firm.
Employers will also pay a 15 per cent National Insurance rate on staff salaries above £5,000, rather than the current 13.8 per cent levy on wages exceeding £9,100.
And the National Living Wage will go up by 6.7 per cent to £12.21 per hour, while the minimum wage for 18 to 20-year-olds will soar by 16.3 per cent to £10 per hour.
Budget fallout: Britain’s pubs, restaurants and hotels experienced the fastest increase in costs last month, according to the latest Lloyds UK Sector Tracker
Since these measures were unveiled, pub chains including JD Wetherspoon, Fuller’s and Young’s have warned of multi-million-pound cost impacts.
Lloyds UK said the level of cost increases imposed by tourism and recreation firms last month measured 67.5 on its index, compared to 66.3 in October.
Any number above 50 indicates an overall rise measured against the previous month, and a figure below 50 denotes a drop.
Just two of the 14 sectors monitored by Lloyds did not hike prices in November, the same as the prior month.
Lloyds also found that companies’ future output expectations declined to their worst level for almost two years.
Among the industries with the largest contractions in output were healthcare, with a score of 40.8, followed by metals and mining, with 42.3, and household products manufacturing, with 42.7.
The number of firms who said inflationary pressures could impact their future activity also jumped to over nine times the long-term average: 9.23 in November versus 3.45 in October.
Nikesh Sawjani, senior UK economist at Lloyds, remarked: ‘The softening in output expectation and rise in inflationary concerns is a reflection of the headwinds that businesses are facing into currently.
‘As we reach the end of 2024, businesses are already planning and preparing for what they hope will be a strong start to the New Year.’
The UK inflation rate went up to 2.3 per cent in the 12 months ending October, just above the Bank of England’s 2 per cent target.
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