The UK pubs and restaurants body has urged the chancellor to extend VAT support to the sector beyond April as surging prices may be more detrimental to the industry than the pandemic.
COVID has resulted in approximately £115bn of lost revenue since the first lockdown in March 2020 for pubs, clubs, hotels, restaurants, and coffee shops, UKHospitality said on Thursday.
UKHospitality, which represents more than 740 companies within England, Scotland, and Wales, said the £140bn-a-year-industry was 43% down compared to normal.
"These figures lay bare the utter devastation that two years of this terrible pandemic has wreaked on the third-largest private-sector employer in the UK, with thousands of businesses closed, many on the brink of collapse, and countless jobs lost,” Kate Nicholls, chief executive, said.
"The last thing operators need - and which a lot of them simply wouldn't survive - is a VAT increase," Nicholls added.
This comes just a day after Heineken N.V. said it plans to increase its prices to mitigate against the rising cost of commodities, energy and freight and warned that this could lead to a drop in the consumption of beer (read more).
The hospitality body insists it is essential the government keeps valued added tax (VAT) at 12.5%; VAT is scheduled to rise in April.
On top of this, homeowners are set to face a triple financial whammy, with the recent interest rate rise increasing mortgage payments, the national insurance hike of 1.25 percentage points set to reduce real wages from April, and the 50% surge in energy bills all set to squeeze budgets higher than ever, also in six weeks’ time.
This means if VAT for the hospitality sector were to be increased, it is highly likely those companies would have to raise prices to make the same profits, which will limit the number of visits the average person makes to these businesses due to tighter budgets from April.
The industry, which has roughly 400,000 job vacancies, warned that its recovery was now at risk from “rising costs across the board,” with the worst still yet to come.