The latest official figures from the Office for National Statistics (ONS) showed the economy shrank at the start of this year.
It estimated UK gross domestic product (GDP) fell 0.1% in January, attributed largely to a fall in the production sector.
The data followed growth of 0.4% in December 2024.
In addition, real GDP was thought to have grown by 0.2% in the three months to January this year, compared with the three months to October 2024, mainly because of growth in the services sector.
The numbers highlighted the importance of reducing costs for hospitality and other key sectors in the upcoming Spring Statement to kickstart the economy, trade body UKHospitality (UKH) said.
Need for action
UKH chief executive Kate Nicholls commented: “The economy unexpectedly shrinking in January demonstrates how important action to kickstart the economy is.
“Increasing costs across the board are putting intense pressure on both businesses and consumers, and this will only intensify in April, when £3.4bn hits hospitality businesses.
“Hospitality growth had been storming ahead in November and December but, like the economy, contracted in January.
“This shows how vulnerable businesses are and emphasises the need for action at the Spring Statement to reduce costs and boost business confidence.
“With the right measures, namely delaying the lowering of the employer NICs threshold, hospitality has proven to be a sector that can react most strongly and deliver much-needed economic growth, alongside social value.”
Dampen investment
Meanwhile the British Beer & Pub Association (BBPA) asserted the Chancellor could foster economic growth by reducing taxes for the sector.
This comes as operators and industry leaders told The Morning Advertiser (The MA) hospitality firms needed to see “action not empty words” in the fiscal address, set to place on Wednesday 26 March.
A BBPA spokesperson said: “The Chancellor can help turn the country’s fortunes around by ensuring that brewers and pubs, who pour billions into the economy, aren’t throttled by exorbitant costs like EPR that will further dampen investment and growth.
“Our sector is already one of the most highly taxed in the country and is staring down the barrel of unfair and chaotic packaging reform costs which will charge pubs twice to recycle the same glass bottle and drive up the price of glass beer bottles.
“The chaotic implementation of EPR will cost brewers and pubs upwards of £150m, dent business and hurt hardworking staff, so it’s vital Government urgently reviews these fees before it damages the economy.”
