Total job headcount throughout the UK’s pubs and restaurants is at its lowest level since the pandemic, as businesses struggle to break even in the wake of Rachel Reeves’ devastating Autumn Budget. One wonders how many signals the Treasury requires before it revisits the most damaging tax increases heading to a business near you in the next three weeks.
New data suggests that job cuts throughout the hospitality and wider service sectors have reached their highest level in over four years.
A trading note posted by S&P Global Market Intelligence last week noted a “challenging business environment” for UK service providers going into 2025 as “stagflation conditions appear to take firmer hold.”
“Businesses widely noted sharply rising salary payments and many also felt the impact of suppliers passing on forthcoming increases in employers’ national insurance contributions,” reported S&P’s economics director Tim Moore. “Across the service sector, employment shrank for the fourth month in a row with the pace of job reduction its fastest since January 2021.”
Indeed, employment cost fallout from the autumn Budget has now seen cost inflation jumping for five straight months, with the inevitable knock-on affect of increased prices for consumers.
That hit a low point – or more accurately a high point with the announcement recently that inflation had risen to 3 percent.
Trade association UK Hospitality has already sounded the alarm as to the devastating impact the joint impact of a hike in minimum wage and National Insurance Contributions will have on the country’s pub and restaurant trade: with estimates last month that over 750,000 employees nationwide will meet eligibility under the new NIC requirements, carrying a £1bn price tag.
To add insult to injury meanwhile, S&P have corroborated wider business sentiment in claiming that the perception of inflated costs and poor government leadership was leading to penny-pinching amongst both private and business clientele.
“Service providers widely noted headwinds to growth from cost cutting and heightened risk aversion among corporate clients as well as delayed investment plans,” Moore surmised. “There are also reports citing weak consumer confidence and cutbacks to non-essential household spending.”
