By Angela Green: A spoonful of sugar needs to be added to Government Economic policy.
The Bank of England’s monetary policy committee earlier today announced it would keep UK interest rates on hold at 4.75% warning that the nation’s economy is on the brink of stagnation. Stubbornly high inflation in the UK and the risk of Donald Trump igniting global trade wars when he takes office next month clearly have been factored into policy equations.
Keeping interest rates at 4.75% was widely expected following the central bank’s monetary policy committee predicting zero economic growth in the final quarter of 2024. Yesterday’s jump in inflation to 2.6%, quickly following a pick-up in wage inflation reported on Tuesday, indicating a weakening economy.
Inflation is all too evident in every aspect of our day to day lives, shopping for food being probably the clearest indicator. With most of the population seeing less money coming in and having to spread it more widely.
The same is true for most businesses, and is certainly true for most hospitality and catering businesses. Costs are rising faster than revenues, and margins that were already thin are now being pared to the bone.
In response to today’s decision Michael Kill, CEO, NTIA told us: “The current financial situation for thousands of (hospitality) businesses is not sustainable. You cannot foster recovery while tying the hands of one of the economy’s most dynamic sectors behind its back. The current approach is a disservice to the businesses and workers who have consistently contributed to economic resilience.
“The Spring Budget is a critical opportunity for the government to reassess its strategy and take decisive action. We demand targeted interventions, including relief on business rates, VAT reductions, and energy support, to safeguard the future of our industry.”
“The message to the Chancellor is clear: the night-time economy cannot survive on rhetoric. Bold steps are needed—don’t waste this chance to support a sector vital to the UK’s economic recovery.”
Kate Nicholls, Chief Executive of UKHospitality, said: “It’s disappointing that the Bank of England has held interest rates today.
“A rate cut could have helped incentivise economic growth and relieve the pressure of high interest rates on businesses, particularly those in hospitality saddled with Covid loan repayments.
“While inflation increasing for the second consecutive month is concerning, generating economic growth has to be the priority.
“Interest rates coming down and a rethink of changes to employer NICs will both be critical components in providing hospitality businesses with the financial headroom they need to invest and grow.”
The economic outlook for 2025 currently is continued austerity. Following more than a decade of such from by a myriad of consecutive remixes of conservative government Labour now needs to step up to the plate and deliver. Fixing the long term problems the conservatives created is of course a monumental task, one that requires prodigious effort and initiative, and a magic button is not on the horizon. Some small wins however would help to sugar the medicine.
Hospitality’s class action against Visa and Mastercard set out simply
