Sector underpins economic importance by fuelling GDP growth

13-Mar-2024 - Last updated on 13-Mar-2024 at 13:31 GMT

Underpinning importance; hospitality sector was one of the biggest contributors to economic growth in January according to ONS (Credit:Getty/MarioGuti)

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The hospitality sector was one of the biggest contributors to economic growth in January, “underlining the importance” of pubs.

According to the latest figures from the Office for National Statistics (ONS), released today (Wednesday 13 March), monthly GDP figures saw marginal growth of 0.2% in January, following a fall of 0.1% in December 2023.

The upturn was largely attributed to the services sector, which includes hospitality, with the subcategory’s output also having seen 0.2% of growth.

According to trade body UKHospitality, the hospitality sector contributes £93bn annually to the economy, generating £54bn of tax for the Treasury and employing more than 3.5m people.

In a post shared to X, UKH chief executive Kate Nicholls said: “Positive signs of growth - underlining the importance of services sector and particularly hospitality and retail to the economy.”

Turning a corner

However, ONS added GDP was estimated to have fallen by 0.3% in January 2024 compared with the same month last year and, looking over the longer term, had fallen by 0.2% in the three months to January 2024 compared with the three months to January 2023.

As reported in the BBC, the figures could indicate the economy could be turning a positive corner after entering a technical recession at the end of last year.

Voices from across the sector had repeatedly called for vital changes from the Government in the Spring Budget, including VAT and business rates reformation, in a bid to bolster growth for both the economy and hospitality firms.

Feeling the brunt

However, Chancellor Jeremy Hunt instead opted to extend the freeze on beer duty, to which the industry shared its “disappointment”.

In addition, the latest inflation update from ONS, released Wednesday 14 February, showed the headline rate to inflation had remained stagnant in the 12-months to January 2024, remaining at 4%.

Speaking last month, Nicholls said: “Hospitality businesses are continuing to feel the brunt of [rising] costs, with food, drink and energy all continuing to increase at a rapid rate.

“Unfortunately, the vast majority of businesses have absorbed all they can and are now forced to pass these onto consumers.”