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A quarter of UK hospitality companies say they have run out of cash reserves, new research shows, as industry bosses urge the Treasury to prioritize tax cuts for the sector.
A joint survey by the British Hospitality Association, the British Beer and Pub Association and the Ulster Hospitality Association revealed that venues across the country are facing increasing cost pressures.
The trade groups said Britain’s pubs, restaurants, hotels and cafes were in a “dangerous state” and needed “urgent support” to avoid local businesses closing permanently.
New data compiled by hotel companies between January 15 and February 1 showed that 25% of companies surveyed had no cash reserves, and another 29% said they only had enough cash reserves to last three months.
The rising costs experienced by businesses have led to nearly two-thirds (64%) of businesses being less optimistic about their prospects for the next 12 months, a rise of 6 percentage points compared with October 2023.
In this regard, 94% of companies said that reducing value-added tax should be the government’s top priority.
The industry groups said in a joint statement: “These results clearly demonstrate the dangerous state our pubs, restaurants, hotels and cafes are in.
“The fact that a quarter of cash reserves have been completely depleted is really concerning.
“These businesses are extremely vulnerable to the slightest shock forcing them to close their doors permanently.”
Bosses have issued a stark warning ahead of the chancellor’s spring budget next month.
They urged Jeremy Hunt to help support the industry by reducing expected increases in business rates, reducing current VAT rates and cutting tariffs.
High street businesses will face an inflation-linked increase in business rates of 6.7% in April, with property taxes affecting them.
Industry leaders are also urging a reduction in VAT (currently 20% on food and non-alcoholic beverages) to avoid higher pricing in the future.
The groups also called for tariff cuts after last year’s alcohol tax overhaul led to higher prices for some products, such as many wines and spirits.
The agencies said: “If the government wants to avoid further price rises for the public and further closures for the hospitality industry, they need to listen to our members and act now.”
According to data released last month by CGA by NIQ and AlixPartners, 6,180 restaurant locations permanently closed last year.
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