Interest rate hike could be ‘final straw’ for hospitality firms
The Scottish Licensed Trade Association (SLTA) has warned that yesterday’s (4 August) interest rate increase could be too much for some smaller businesses to bear.
The Bank of England voted to raise the interest rate by 0.5% to 1.75% – the largest increase in 27 years. The UK is now projected to enter recession from the fourth quarter of this year.
Colin Wilkinson, SLTA managing director, said: “The last thing businesses need just now is for the Bank of England to increase the interest rate. Businesses have been feeling the squeeze since the pandemic hit two-and-a-half years ago and are already grappling with paying off debts incurred during Covid. This could be the final straw.”
The UK hospitality industry has faced hardships in recent months due to the on-going staffing crisis, as well as revenue losses caused by National Rail strikes.
Wilkinson added: “The outlook really is gloomy for hospitality businesses who don’t want to pass on rising business costs to their customers who are facing the same soaring cost increases to their energy, fuel and food bills. However, for some there is no choice and finding the right balance is proving exceptionally difficult for many.
“SLTA has previously described the combination of all of these mounting overheads, skills shortages and concerns about the economy as creating a ‘perfect storm’ – the reality is that the storm has not yet reached its peak.
“We need to see a host of urgent measures to help businesses, including a reduction in the rate of VAT and lower business rates.”
A recent survey of senior decision makers across the hospitality sector found that 64% felt abandoned by the UK government.
Wilkinson also called on the next UK prime minister to adopt a “business-first” agenda. “The next leader of the Conservative Party and our new prime minister must immediately adopt a sharp focus on the economy and put business first in order to protect businesses and jobs, and stimulate economic growth,” he noted.
The SLTA represents independent licensed trade establishments and personal licence-holders, and is the only Scottish body to represent all sectors of the licensed trade, including pubs, hotels, restaurants, off-sales and late-night premises.
Last year it was reported that the national lockdowns had left Scottish hospitality with £1.2 billion (US$1.46bn) in debt.