The warning follows today’s (21 March) data release showing an increase in total UK unemployment of 24,000 in the three months to January.
UKH chief executive Kate Nicholls said: “Today’s figures do not make for reassuring reading for the Government or our industry.
"Although the total number of unemployed remains relatively low, an increase in the rate of unemployment points to employer uncertainty and continually increasing barriers to investment.
“Last month’s figures show that the hospitality sector has been hit particularly hard. Businesses that have driven the revitalisation of high streets since the recession are now, once again, feeling the squeeze.
“We have repeatedly told the Government that the sector is facing a substantial barrier to further growth, mainly in the enormously disproportionate business rates bill that continues to cripple businesses. This will only be exacerbated when the increase hits in April; in all likelihood, leading to further unemployment as businesses struggle to swallow these cost burdens.
“If the Government does not act to support businesses by cutting costs, then we are only going to see a continued deceleration of growth in the sector and a further increase in the rate of unemployment.”
Review the system
UKH has also written to the Minister for Local Government Rishi Sunak MP, calling for an overhaul in the system of discretionary business rates relief and urging the Government to undertake a full review of the entire rates system.
The letter highlights flaws in the system that was introduced last year and raises concerns that relief distributed by local authorities "may be in breach of EU state aid rules".
It urged the Government to reassess the application of state aid rules to ensure that hospitality businesses receiving reliefs are not "penalised and to undertake the promised review of the entire system at the earliest opportunity".
UKH chief executive Kate Nicholls added: “The introduction of discretionary relief for businesses was well-intentioned, but it has caused hospitality businesses a number of significant headaches.
“Local authorities were, in many cases, slow to begin distributing the relief and we saw numerous examples of councils attaching completely arbitrary stipulations to the reliefs. These stipulations ran counter to the spirit of the fund and unfairly penalised businesses that were entitled to relief.
“We are also concerned that the application of the relief may unintentionally breach state aid rules designed to avoid a distortion in competition in the EU. We have informed the Government that we believe discretionary rates relief should not fall into this category and that hard-working hospitality businesses should not be penalised in any way for accessing relief to which they were entitled.
“We have called on DCLG (Department for Communities and Local Government) to act to ensure hospitality businesses that contribute so much to their local communities are not punished and reiterated our call for a full review of the business rates system that is long overdue.”