Hospitality Sector Thrives in December Amid Concerns Over Rising Operational Costs

Promising Growth in December

The latest figures from the Office for National Statistics (ONS) reveal a promising trend for the hospitality industry, highlighted by a 2% increase in output within the food and drink sector during December 2024.

This surge positions it as a key player in the overall growth of consumer-focused services.

After a solid performance in November, which saw a 1.6% rise in food and drink production, the December results instill hope for continued progress in the industry.

Yet, many stakeholders are wary of an impending financial hurdle: a projected £3.4 billion spike in costs slated to take effect in April could jeopardize this upward momentum.

Financial Challenges Ahead

These upcoming expenses are attributed to several factors, including increased national insurance contributions (NICs) for businesses, and the anticipated hikes in both the national living wage and national minimum wage.

Estimates suggest that more than 774,000 workers will suddenly fall under the employer NICs umbrella, dramatically affecting approximately 63% of previously exempted employees.

Kate Nicholls, CEO of UKHospitality, urges the government to acknowledge the recent successes within the hospitality sector and to consider alleviating the financial strain caused by rising NICs.

Call for Government Support

Despite navigating a difficult economic landscape, Nicholls points out that the hospitality industry has consistently shown resilience and growth in recent months.

She believes that government support is crucial; rather than imposing additional burdens on businesses, the administration should see the potential for even more robust growth.

Nicholls advocates for a realignment of government policies to better reflect the strengths and needs of the hospitality sector.

With a thoughtful reconsideration of the proposed NIC increases, the industry may very well continue to flourish and contribute positively to the economy.

Source: Harpers