The Bank of England (BoE) yesterday (Thursday 2 November) announced interest rates would remain at 5.25% in a bid to meet its 2% inflation target.
At its meeting on Wednesday 1 November, the Monetary Policy Committee (MPC) voted by a majority of 6–3 to maintain interest rates. Three members opted to increase rates by 0.25 percentage points to 5.5%.
Moreover, during a live news conference following yesterday’s announcement, Bank of England governor Andrew Bailey said interest rates would be kept “high enough for long enough to make sure we get inflation to the 2% target”.
UKHospitality (UKH) chief executive Kate Nicholls said: “High interest rates pile further pressure on the hospitality sector, particularly for businesses that had to take out loans during the pandemic in order to survive.
“Operators are now facing higher repayment costs for such loans, at the same time as trying to fund soaring bills for energy, food and drink.”
Night Time Industries Association (NTIA) CEO Michael Kill added he was “deeply concerned” about interest rates remaining at 5.25%, adding while addressing inflation was important, this move could impact the sector “significantly”.
“The Government's long-term strategy to reduce inflation to a 2% target by the end of this year is losing credibility daily, which has a direct impact on consumer spending and business confidence within the night time economy.”
In its most recent update, the Office of National Statistics last month revealed inflation stood at 6.7% in September, which was unchanged from its August level.
Nicholls continued: “We all have a shared interest in reducing inflation and the most effective way to do this will be to target the root causes, such as energy costs and other avoidable cost pressures.
“To this end we are urging the Chancellor to freeze the business rates multiplier and commit to an extension of business rates relief, which is needed as soon as possible.
“Without this action the sector will be facing a possible bill of £1bn next April, something which it can currently ill afford.”
Ahead of the upcoming Autumn Statement, due to take place on Wednesday 22 November, voices from across the sector have called for further support, in particular with regards to business rates relief, from the Chancellor.
Night-Time Economy Adviser for Greater Manchester Sacha Lord last week implored the impact of the statement should “not be underestimated”, claiming firms “cannot be sustained” in this "challenging economic outlook".
The Campaign for Real Ale (CAMRA) national chairman Nik Antona said: “The multitude of ongoing challenges [faced by the sector], alongside interest rates remaining high, is an impending recipe for disaster for the UK’s pubs, socials clubs and taprooms.
“Unless the Government makes changes to support the industry at the upcoming Autumn Statement, many in the licensed trade may cease to exist in the near future."