“Devastating Impact” of April Tax Hikes Laid Bare

The latest GDP figures announced this week and the fall in recent job numbers reveal the “devastating  impact” cost hikes that came into force in April are having, one trade body has warned.

Kate Nicholls, Chief Executive of UKHospitality, said:
“It’s clear that economic warning signs are flashing and the impact of April’s cost increases are having exactly the impact that was predicted.

“GDP figures can be volatile but an immediate shrinking of the economy and more than 100,000 jobs lost in just a month shows that the huge increase to employer NICs is putting the brakes on growth.

“Hospitality is a resilient sector and businesses are doing all they can to trade their way out of these challenges, but it has the potential to be the engine for growth if it is properly backed.

“The economy only grows when hospitality is strong. The Government needs to take these warning signs seriously and urgently review and reverse the changes to NICs, while bringing forward clear plans to empower hospitality and the high street.”

The sector is showing some resilience, while latest GDP figures saw consumer-facing services as a whole remain flat with a 0.1% m/m increase, accommodation and food services saw a monthly uplift of 0.3%, and a 0.5% increase over the last three months.

Within the headline figure food and beverage services grew 0.8%m/m, while accommodation fell 0.9% on the month.

Commenting on today’s GDP data, Saxon Moseley, partner and head of leisure and hospitality at leading audit, tax and consulting firm RSM UK, said: “Better weather makes a huge difference to consumer spending which can be seen in the monthly GDP growth across accommodation and food services of 0.3%. This offsets the sharp fall in January 2025 and puts the sector back roughly where it was at the end of last year with food and beverage services driving the recovery.

“Given the hit of significant cost increases in April, this growth is good to see and should help operators balance the books. While this was mainly driven by unseasonably sunny conditions in April, , we all know how unpredictable the Great British weather can be, so any ‘recovery’ is not guaranteed.

“Calls from leisure and hospitality businesses for further government intervention were not specifically met in yesterday’s Spending Review, but greater investment in local and regional transport could boost future footfall which will help to support growth in the longer term.”