Shadow chancellor Rachel Reeves’ demand for a fiscal event on public sector pay is sending shudders through hospitality entrepreneurs. Many are scared that an increase in taxes will put even more pressure on them to operate. Inflation has jumped to 3.8%, far beyond the Bank of England’s target rate of 2%. In turn, the hospitality industry is contending with inflationary pressures that are pinching margins throughout the economy.
Rachel Reeves has committed to making “the necessary choices” to bolster the economy, a priority reiterated by the government in recent statements. Yet the long-term impacts of these rulings on businesses are still unclear. Pessimistic about the future, owners such as Jolyon Iles, who operates The Beech Tree, say they are losing faith. He remarked on the unsustainable nature of current economic conditions, stating, “Everything is going up, it is not sustainable. Everything is going up, profits are not.”
The view is shared by local resident and former councilman Duncan Borrowman, owner of the Bailey Head bar. He is urging a temporary cut in VAT and extra help with business rates to relieve the pressure on their finances. Borrowman stressed that time is of the essence. He said, “I believe we’re going to need tangible assistance. It’s even worse than it was post-Covid.” He believes that without intervention, “the whole hospitality sector will suffer.”
Perspective from our next instructor, Amelia Jones from The Little Welsh Bakery RealPositiveBusiness She wants Reeves’s budget to give employers confidence and help them know what to expect so that they can flourish even when the economy is shaky.
Rents and other operating costs are still increasing at a rate far beyond what was forecast, adding tremendous strain to hospitality venues. Iles highlighted the harsh reality many are facing: “We are hopeful there will be some sort of relief for hospitality businesses, a reduction in VAT or some other means of alleviating all the other costs we are facing, but we are not optimistic.”
With the budget announcement fast approaching, hospitality businesses are still desperately waiting to hear. These are not just theoretical concerns—owners are feeling the squeeze from growing inflationary pressures combined with increasing taxes. They are deeply afraid these encroachments will undermine their livelihoods and erode the collective health of an industry.