More than 111,000 jobs could be lost in pubs, clubs and restaurants before the Budget in November as businesses struggle to survive £3.4bn of extra costs in the past year, Rachel Reeves has been warned.
UK Hospitality, a trade group representing the sector, said more than 10,900 jobs were lost in hospitality last month, bringing the total losses in the industry since the 2024 Budget to 84,000.
The sector is believed to employ more than 2m people, but UK Hospitality estimates a total of 55 per cent of all job losses in the country since last year’s Budget have come in hospitality. The government lowering employer National Insurance Contributions thresholds has been most damaging of all, the group said.
Now, UKHospitality is urging the government to lower business rates, fix the NICs issue and also cut VAT in a bid to allow the industry to push for the overall economic growth that Labour have made their aim.
New rules around packaging have raised fees for businesses in the food and drinks industry, while increased labour costs, business rates relief being cut and - in some cases - tariff and exchange rate uncertainty have all contributed to higher costs for businesses in the hospitality sector this year.
Kate Nicholls, chair of UKHospitality, said: “Losing 111,000 hospitality jobs by the Budget will be a devastating landmark for hospitality to reach and will be one that truly illustrates the unthinkable damage done to our sector.
“Hospitality is a sector that has a long and proud history of providing opportunity and jobs for all, and witnessing more than 84,000 jobs lost in hospitality already is heartbreaking.”
She said cost increases introduced at last year’s Budget “disproportionately hit our pubs, restaurants, hotels and cafes, to name a few”, and particularly the 774,000 people employed on part-time or flexible hours.
“Hospitality is being taxed out and the sheer scale of cost increases hitting the sector is forcing businesses to make tough decisions to cut jobs, raise prices, slash investment and reduce hours.
“This is the opposite of what we want to do. We want to create jobs, help people come back into work, invest in our businesses and support the communities we serve,” she said.
Experts are warning the current outlook is likely to continue without changes, though not all of it is down to employment costs.
Deutsche Bank’s chief UK economist Sanjay Raja said “budget uncertainty” would contribute to businesses keeping hiring plans low for now, with increased automation and digitisation also playing a part in many industries to fewer job vacancies, including hospitality.
Jack Kennedy, from jobs site Indeed, noted the wider jobs market and wages data together with inflation meant no interest rate cuts were likely from the Bank of England any time soon.
Meanwhile, the British Chambers of Commerce (BCC) has reiterated its stance that the government cannot place further burdens on businesses when Ms Reeves delivers her Budget.
“The ongoing impact of business cost pressures, most notably from the national insurance hike, continues to hit the labour market,” said Jane Gratton, deputy director of public policy at the BCC.
“Unemployment remains high and vacancies continue to fall with firms having to make difficult decisions on recruitment.”
Ms Gratton added: “Firms can’t absorb further cost pressures. That's why we are clear, there must be no more taxes on business in November’s Budget.
“The Chancellor must also use her statement to invest in workforce health and skills, two issues currently hampering the business growth we all want to see.”
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