On Thursday 30 April, the BoE announced interest rates would be held at 3.75%, with the Monetary Policy Committee (MPC) voting 8-1 to hold the rate, amid continued uncertainty over the conflict in Iran.
The decision will mean continued pressure on pub operators holding variable-rate debt, outstanding commercial loans, or Covid-era loans.
While rates have been gradually reduced from a peak of 5.25% in August 2023, borrowing costs remain elevated, limiting financial headroom for many hospitality businesses.
Little relief
On top of this, operators are facing wider economic headwinds from rising taxes, energy bills and wage costs, while instability in the Middle East continues to affect fuel prices, impacting supply chains and consumer footfall.
UKHospitality (UKH) chair Kate Nicholls said while the hold on interest rates was expected, given the current economic uncertainty, it offers “little relief” for operators grappling with high cost pressures.
She told The Morning Advertiser (The MA): “With the cost of doing business still the number one challenge, from higher employment and energy costs to rising business rates, many are being squeezed from all sides.
“If the Government wants to harness the sector’s potential to create jobs, help high streets flourish and boost growth, it must act now to lower costs and ease the burden.”
Meanwhile, British Institute of Innkeeping (BII) CEO Steve Alton told The MA the cost of doing business for hospitality remains “unfairly high” in comparison to other sectors.
Huge challenges
“While continuing instability caused by the war is affecting the economy as a whole, our nations’ pubs were already facing huge challenges”, he continued.
Alton urged the Government to relevel the playing field for pubs and address the “culminative tax burden” they face.
The CEO called for VAT reductions for hospitality, changes to business rates and recognition of the key role pubs play in communities and the wider economy.
Alton added: “Pubs must heat, power and light their venues, every single day, as well as have experienced team members to care for their customers in communities and high streets across the UK.
“With more than 40p in every £1 going directly to Treasury, urgent action is needed to safeguard the future for these unique places for people to connect."
