Pressure increases on hospitality
A new survey of hospitality businesses has revealed mounting cost pressure, with the number of businesses operating at a loss rising significantly in just three months.
Campaigners say the figure demonstrates the “devastating impact” of the cumulative cost and tax burden for hospitality in the UK – the highest in the economy.
And they point to the fact that the Republic of Ireland has reduced its hospitality rate to nine per cent.
The survey, conducted by UKHospitality, the British Beer and Pub Association, the British Institute of Innkeeping and Hospitality Ulster, revealed almost a quarter of respondents are now operating at a loss, up from 15 per cent three months ago, and five per cent say their business is no longer viable.
The result of the mounting cost pressure is that 16 per cent of hospitality businesses – one-in-six – say their business is at risk of failure within the next 12 months.
Respondents were clear that cutting hospitality VAT is the most impactful measure to support hospitality – with 89 per cent backing a cut.
The results have been published as the #VATsTheProblem campaign, spearheaded by chef Tom Kerridge, continues to grow, with more than 240,000 backing a petition to cut hospitality VAT to 10 per cent.
The UK has the second highest VAT rate in Europe, with Ireland the latest to reduce its rate for the sector.
Speaking on BBC’s Newsnight programme, four top UK chefs and restaurant owners urged the government to cut VAT for restaurants and pubs as they warned working in hospitality was the “hardest it has ever been”.
Tom Kerridge, Yotam Ottolenghi, Ravneet Gill and Simon Rogan told BBC Newsnight VAT should be slashed to 10 per cent to ease pressure on businesses and bring rates closer to levels across Europe.
Simon Rogan said: “We’re not making any money whatsoever, and we’re just keeping our heads above water,” while Tom Kerridge said the government was getting taxation on businesses “very, very wrong”.
Yotam, who has 11 restaurants, cafes and delis, described the situation as “crippling” – not just for his own business, but for others running bakeries, cafes, and pubs.
Three hospitality businesses have gone under every day since the start of 2026, according to the industry body UK Hospitality.
- To discuss any issues raised by this article please contact me on 01772 430000
