Weak business confidence and soaring costs ignite hospitality’s push for budget aid

Britain’s Hospitality Bosses Feeling the Heat—and the Cost Pressure

New numbers from the Business Confidence Survey show misty clouds gathering over the UK’s top restaurants, pubs, and hotels. The hospitality industry’s leaders are suddenly less optimistic about the future and fresh about the rising costs that are chipping away at profits and cash pockets.

Confidence is Taking a Tumble

41 % of leaders now feel confident about the market in the next 12 months – a fade of 8 percentage points from last October’s 49 %.
57 % see their own businesses doing well in the coming year, down from 62 % a few months ago.
Only 9 % think their company might fail in 2024 – up four points from October.
And 10 % admit they lack any safety‑net cash reserves.

Costs Are Cracking the Cashbox

The survey spells out a relentless cost parade:

Pay – 36 % saw wage hikes, 62 % reported big swings.
Food & Drink – 48 % saw prices tick up, 50 % experienced sharp rises.
Energy – 81 % reported higher bills.
Insurance – 80 % felt costs climb.
Rent – 47 % said it went up.

Average increases in 2023 were a hefty 34 % for energy and 10 % for staff pay. Vacancy rates sit around 10 %, and with the National Living Wage on the rise, salaries could hit new heights.

What Do the Leaders Want from the Government?

VAT cut for hospitality.
Full business‑rates reform.
↓ Lowered business‑rates multiplier permanently.

Nearly all participants flagged concerns about: National Living Wage, business rates, food & drink inflation, interest rates, and VAT – each topping the list of worries.

Numbers that Back the Alarm

Data from other studies underline the crunch:

Almost 3,000 licensed premises shut down in 2023 (about eight closures daily).
Year‑on‑year sales growth for big groups in January? A mere 0.1 %.

Industry Voices

Karl Chessell (CGA by NIQ) reminds us that the sector can bounce back once it has the right support:

“Hospitality is resilient, but the long COVID lockdowns and the inflation roller‑coaster have taken a toll. Profit margins are sliding, reserves are shrinking, and many small operators feel on the brink. A targeted government lift is urgent if we want to keep these pubs and restaurants pumping through the recession.”

Kate Nicholls (UKHospitality) echoes the call:

“This dip in confidence demonstrates why the next Budget must address VAT hikes and looming business‑rate increases. The board is speaking up for the sector – and we’re hoping the Chancellor acts on 6 March.”