UKH reacts to interest rate rise

UKHospitality (UKH) has expressed concern over the Bank of England's decision to raise interest rates by 0.25 percentage points to 5.25%. In a bid to control inflation and lower it to the Bank's 2% target, the decision was made to increase interest once again.

Hospitality businesses are still fighting through the perfect storm of high energy costs, recruitment shortages, tax discrepancies and business rates debates. With many operations subject to post-Covid loan agreements, the rise in interest rates will be more unwelcome news.

"Hospitality businesses are particularly exposed to further rate rises, due mainly to the Covid loans many were forced to take out during the pandemic," said UKH chief executive Kate Nicholls. "Yet another rise in interest rates only exacerbates the financial challenges many are grappling with, alongside high energy costs, food and drink inflation and labour shortages."

Nicholls said the inflationary pressures being faced are supply-led, not demand-led, and urged government to take action to bring down these business costs.

"A good starting point would be to rapidly implement the recommendations made by Ofgem to mitigate the energy crisis," she added. "We would also urge flexibility on loan repayments, including extension to terms, options to move to interest-only payments or delay altogether, and flexible arrangements from HMRC for tax payments.”

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