Ukraine invasion could pose economic uncertainty

By Rebecca Weller contact

- Last updated on GMT

Rishi Sunak: Ukraine invasion could pose economic uncertainty to UK (Credit: Andrew Parsons, No 10 Downing Street via Flickr)
Rishi Sunak: Ukraine invasion could pose economic uncertainty to UK (Credit: Andrew Parsons, No 10 Downing Street via Flickr)

Related tags: Rishi Sunak, Legislation, Economy, Finance

Chancellor of the Exchequer Rishi Sunak has warned Russia’s invasion of Ukraine heeds economic uncertainty for the UK despite a slight growth in January.

With the cost of living at its highest for 30 years, pubs have already been feeling the pinch as energy prices soared and Covid​ left many operators in debt.

This comes after the Bath Pub Company managing director Joe Cussens saw his electricity bill quote rise by 250%.

Cussens told The Morning Advertiser ​the electricity cost for his four pubs was expected to increase from £80,000 to £250,000 annually.

He said: “It's almost as worrying as when we entered the pandemic because it's just such a staggering amount, it’s almost like your annual profit just wiped out in one swoop and it's not as if it's that in isolation, it’s that on top of everything else, it's really not great at all.”

Long recovery 

As the effects of the Omicron variant of Covid eased, January 2022 saw the economy grow by 0.8% compared with 0.2% in December 2021, according to the Office of National Statistics (ONS).

But pubs were already faced with a long recovery following the Covid pandemic prior to the Russian invasion of Ukraine​ more than two weeks ago.

On top of soaring energy prices​, pubs also face a rise in VAT from 12.5% to 20% in April, an increase in employers National Insurance and minimum wage and supply issues ​.

According to a report by the BBC, growth within the hospitality and travel sectors is still 6.8% below pre-pandemic levels, but overall, the economy was on its way to normality.

However economic consequences of the Ukraine invasion have pushed inflation and growth for the UK in the wrong direction, according to BBC economics editor Faisal Islam.

In order to combat this Labour's shadow chief secretary to the Treasury, Pat McFadden, called for the government to stop the planned National Insurance increase.

McFadden’s call follows that of trade bodies across the hospitality sector for the reduction in VAT to remain after April, something 79% of consumers also agree​ with.

Rising costs 

Additional pleas to the Government have been made regarding a repeal of the late night levy​, with UKHospitality chief executive Kate Nicholls previously having stated hospitality was the only industry in a position to deliver post-pandemic jobs, growth and investment​ at speed, but keeping VAT at 12.5% was vital to achieve this.

Earlier this week, the trade body announced it would work with the UK Government to offer aid and support to those affected by the crisis​ in Ukraine​ as multiple operators​ across the sector also began fundraisingefforts​ with many removing Russian products​ from their stock.

Speaking last month regarding UKH’s suggestions for living with Covid​, Nicholls said: “Businesses in our sector are low on cash, deep in debt and facing rising costs across the board, including a hike to 20% VAT in April.

“In order to emerge from the pandemic in a position to fully play its role in the wider economic recovery of the country, the sector needs a more stable and predictable operating environment as well as further support.”

Related topics: Legislation

Related news

Show more