Pubs and restaurants will close and warn of a tough Christmas ahead after Rachel Reeves’s budget this week sees tax rises and coronavirus-era business rates relief ends.
Mr Reeves is due to unveil his proposed tax hike budget on Wednesday to pay for improved public services, with Labor sources suggesting the government intends to cut taxes and spending by a combined £40bn. . Businesses across the economy are bracing for tax hikes that could weigh on consumer spending.
However, the hospitality industry is particularly concerned as the business fee relief measures are scheduled to end next spring, with taxes on accommodation facilities potentially quadrupling. The fare relief was introduced for pubs, restaurants, bars and cafes in 2020 after the government ordered all hospitality businesses to close during the Covid-19 pandemic.
Mr Reeves’ Conservative predecessor Jeremy Hunt last extended business interest rate relief in November. The relief offers a 75% discount on purchases up to £110,000 until 1 April.
The British Beer and Pub Association, the British Hotels Association and UKHospitality jointly called on Reeves on Monday to effectively make the bailout for hospitality businesses permanent.
Lobby groups said a new Nielsen IQ survey found that 54% of companies surveyed said they would reduce employment levels and 51% said they would cancel planned investments if full operating rates were reintroduced. Ta.
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More than a quarter of businesses surveyed said they would close at least one site if billing returned to pre-pandemic levels.
In a joint statement, the lobby groups said: “Many cash-strapped pubs, breweries, bars, restaurants and cafes, to name just a few, will not be able to withstand a quadrupling in charges.” said.
“If we don’t act, half of businesses risk not only being forced to cut jobs or cancel investment, but also have to consider closing at least one site per quarter, across their entire business. There is a possibility.”
With consumer spending still sluggish, there is a possibility that a bill will be introduced to increase fees for businesses. British consumer confidence fell this month, according to the long-running GfK Consumer Confidence Survey. Some analysts have warned of a possible “recession” in which spending could fall even though the economy remains relatively strong.
Tax increases for consumers are expected to include a “stealth” freeze on the income tax threshold, which would raise revenue while keeping the overall tax rate unchanged. Some economists believe employers may limit pay rises in response to widely expected increases in employer national insurance contributions.
Accountancy firm RSM UK said in a survey of 2,000 people that 42% of British consumers would spend less this Christmas if tax increases affected their income in the budget.
Saxon Moseley, Partner and Head of Leisure and Hospitality at RSM UK, said: “Despite rising real wages, the impact on consumer confidence from tax reform could leave the hospitality industry vulnerable to “There is a good chance that spending over the Christmas period will take a hit.”
