Interest rates continue to stifle growth in hospitality

With the right economic conditions, hospitality has the potential to grow its economic value by £29bn by 2027 but in the worst-case scenario, it could contract by £4bn.

Flexibility by the government and banks on repayment terms, including Covid loans, is a critical part of avoiding that. This should include an extension to loan terms, options to move to interest-only payments or delay payments, and flexible ‘Time to Pay’ arrangements from HMRC for tax payments.

UKHospitality chief executive Kate Nicholls comments: "Hospitality has a proven record of delivering growth and creating jobs, and we want to achieve that £29bn economic boost by 2027. However, steep increases in interest rates will quickly stifle growth and squash that potential.

"Hospitality has significant levels of business borrowing, including £10bnalone from the pandemic, and it is a worrying situation if businesses have no choice but to prioritise loan repayments over business investment.

"Combined with other cost pressures across energy, food and drink, this is quickly becoming a ticking time bomb that needs urgent attention.

"A direction from the chancellor to banks to adopt a flexible approach to business borrowing and repayments would be a lifeline for many and should be a top priority for the chancellor tomorrow during his talks with major lenders.

"We want to continue our track record of delivering growth and creating jobs, and the last thing we want to see is more businesses lost to circumstances out of their control, so I would urge the chancellor to work closely with the banks on providing much-needed support to hospitality businesses."

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