By Paul Askew, Chef Patron of The Art School in Liverpool
Tomorrow looks like the country will see interest rates go up again. And one of the most direct impacts is going to be mortgage rates rising accordingly.
Even if some of the impact will not be felt until next year when mortgages deals end and need to be renewed, the narrative of the population’s disposable incomes tightening is not going away. And there’s only so much punishment consumers can take. This is going to pile even more pressure onto hospitality businesses already on the brink.
Every week in Liverpool, independent eateries announce their closures. For many hospitality operators across the UK, there’s nothing left in the bank, no room to manoeuvre, instead faced with a litany of costs going up in pretty much all area of the industry. There’s been no post pandemic recovery because we’ve been assailed by food service inflation breaching 20% again, the ongoing cost of living crisis, higher utility bills, no reduction in VAT, archaic business rates and ongoing and unresolved staff and supply chain issues, compounded by Brexit.
This means even more businesses will suffer and close down in the coming weeks and months. Do we want high streets filled with identical chain options only? Do we want to see the independent suppliers across the land fail, because there is no one left to supply to? And how do we nurture the next generation of skilled workers in hospitality, when for many potential recruits they see an industry being ravaged by these factors?
I agree whilst some forces are external, there are others which can be corrected. We continue in our belief that a VAT reduction would help enormously, certainly to 15% or 10%. Such a difference now, for many restaurants, bars, hotels, clubs and pubs, is going to be the literal difference between surviving or failing, as consumers are forced to make ever tougher spending decisions based on diminishing incomes.
None of us in hospitality should just be surviving – we should be flourishing – yet the prevailing challenges are not going away anytime soon. We need a major moment to recalibrate the entire hospitality industry and we need it now.