Yesterday (Thursday 18 September) the Bank of England announced its decision to hold interest rates at 4% for the second month in a row in a bid to meet the 2% inflation target in a way that sustains growth and employment.
At its meeting on Wednesday 17 September, the Monetary Policy Committee (MPC), which sets monetary policy, voted by a majority of 7-2 to maintain interest rates at 4%. Two members voted to reduce the figure by 0.25 percentage points to 3.75%.
Pause investment
Earlier on this week, the Office for National Statistics (ONS) also revealed the headline rate of inflation rose by 3.8% in the 12 months to August 2025, which was unchanged from July.
Prices in the hospitality sector, notably restaurants and hotels, were found to have made some of the largest upwards contributions to the figure, according to the ONS.
UKHospitality (UKH) chair Kate Nicholls told The Morning Advertiser (The MA) the updates confirmed the “stagnant” state of the economy.
She continued: “The is in major need of a boost. Pubs, a historic driver of growth, remain taxed out from cost increases and, instead of being part of the solution, are being forced to cut staff, freeze recruitment, increases prices and pause investment.
Community assets
“The Government should use the Budget in November to address the damage that has been done to the sector from tax increases and take action to lower business rates, fix NICs and cut VAT.”
Moreover, British Institute of Innkeeping (BII) CEO Steve Alton told The MA pubs across the UK continue to face “incredible financial pressures” as the stagnant economy impacts all areas of business.
He said: “Energy, staffing costs, food and drink prices and the huge impact of the tax rises in April’s budget are all taking their toll on profitability, despite strong trading for many.
“Quite simply, our pubs cannot continue to shoulder the unfair burden of taxation placed on them, and immediate action must be taken in the Budget in November to mitigate these costs, before it is too late for these vital community assets.”
