Speaking on a leaders panel about sector resilience at MCA’s Restaurant Conference, the UKHospitality chair said Chancellor Rachel Reeves is unlikely to announce a direct hit on most businesses, while operators in alcohol and gambling remain exposed.
Nicholls told delegates that “unless you are in the business of sin” such as alcohol or gambling, a major rise in business taxes looks unlikely.
However she said that the broader fiscal picture could still undermine trading across the sector.
‘So unpredictable’
In 20 years of doing it, it is the most unpredictable Budget that I have ever seen.
Kate Nicholls
“I can’t give you any informed speculation about the budget at the moment because it is so unpredictable.”
She pointed to speculation around possible rises in income tax which could reduce disposable income for key pub and bar customers.
“It’s going to hit our more affluent customers and it’s going to hit our restaurant customers who are already not coming out as frequently. They are not spending as much because they are concerned about their disposable income.”
Consumer confidence
For operators, the most significant risk sits with consumer confidence rather than direct policy change.
High income households remain vital for wet and mixed sites, and any squeeze on take home pay could further delay recovery in evening and weekend trading.
Nicholls added that expectations should remain realistic. “I don’t think it’s going to be good, and I don’t think we are going to get anything brilliant, but I think all we can do is hope that it is neutral. At the moment, a neutral budget when we are talking about tax increase all round and everybody bearing the burden, will be better than nothing.”
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