Businesses in the hospitality sector are facing a round of further business costs following the Autumn Budget. A number of policies were announced which will increase employment costs. After a drop in the Bank of England interest rate in November, the expectation is they will be held at 4.75% at the end of December.
The biggest cost to face the hospitality sector which has a huge reliance on staff who are typically within 18-20 year old age bracket, is the increase in the Minimum Wage from 6th April 2025 from £8.60 to £10.00. This will be a cause of concern for hospitality businesses as they will see their remuneration bill increase.
Employers’ National Insurance will also see an increase from 6th April 2025 by 1.2% to 15% and the earnings threshold will be reduced from £9,100 to £5,000. This will have a significant impact on the sector leading to reduced investment, no pay rises, price increased and a reduction in headcount in order to absorb the extra cost. Both of these announcements will result in a larger employment bill for the sector.
Following the Christmas period, consumers will be feeling the pinch as interest rates increase mortgage payments which will result in less expenditure in the hospitality industry.
