Hospitality is suffering impact of recession

By Gary Lloyd

- Last updated on GMT

GDP figures: sector suffering despite narrowly avoided recession (Credit: Getty/atiatiati)
GDP figures: sector suffering despite narrowly avoided recession (Credit: Getty/atiatiati)

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The hospitality sector is suffering despite official figures showing the UK narrowly avoided falling into recession in 2022, the Night Time Industries Association (NTIA) has stated.

The economy saw zero growth between October and December with hospitality recording falls of 0.01 percentage points in both the third and fourth quarters of last year, according to the Office for National Statistics (ONS).

Night Time Industries Association chief executive Michael Kill said: “While the announcement today on the December GDP figures suggest we have technically narrowly missed the recession but it is clear thousands of businesses are suffering the impact of a recession.

“Independent businesses are particularly vulnerable, as we saw in the release of Night-Time Economy ONS figures, has contracted by over 13%.

“With these businesses making up a huge proportion of the sector, the Government must act to protect business most at risk.

Huge part to play 

“We have a huge part to play in the UK’s recovery and need the Government to cut VAT in the March budget, for all businesses across the hospitality and night-time economy sectors.”

Although the overall figures by the ONS stated the economy remained flat, there was a 0.5% fall in economic output in December, which has partly been attributed to widespread strike action.

Chancellor Jeremy Hunt said the figures show the UK has an “underlying resilience” but the Bank of England expects a recession to hit this year but added it will be shorter and less painful than previously predicted.

While inflation is slowing at 10.5% it remains close to a 40-year high and the Bank of England is raising interest rates to tackle the cost-of-living crisis.

Sectors of the economy to improve during the third quarter included transport and storage and education by 0.11 and 0.12 percentage points respectively but these categories saw equal fall during the fourth quarter.

Significant interventions 

Administrative and support service activities rose by 0.04 and 0.24 percentage points, human health and social work activities went up by 0.02 and 0.09 percentage points and public administration and defence rose 0.06 and 0.03 percentage points – the only three sectors to make positive progress during the second half of 2022.

British Beer & Pub Association (BBPA) chief executive Emma McClarkin said: “News the UK has thus far avoided a recession is to be welcomed. However, pubs and brewers are still operating in extremely tough conditions, with inflation pushing up prices across the supply chain and consumer confidence remaining low.  

“The absence of meaningful growth in our economy is causing an extreme lack of confidence amongst publicans and brewers, with one in three hospitality businesses predicting business failure in the next 12 months.  

“Our industry has the potential to boost local economies in every single part of the UK and contribute to the country’s overall output, but we are being held back by outdated tax systems, a never-ending energy crisis and red tape at every turn. 

“The Chancellor needs to make some significant interventions in the Spring Budget to turn this around and ensure our industry can make the contribution it so desperately wants to and continue to support livelihoods in communities across the country.”

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