UK Hospitality chief exec warns rise in inflation 'hugely concerning'

UK Hospitality chief executive warns rise in inflation ‘hugely concerning’ for businesses as Jeremy Hunt says increase is likely after ‘blip’ in prices

  • Kate Nicholls warned the sector faced paying almost £1 billion extra in tax bills 
  • The UK Hospitality chief urged Mr Hunt retain hospitality sector rate relief

Inflation is on the rise again, Jeremy Hunt warned yesterday, as he played down the prospect of tax cuts this year.

The Chancellor said a ‘blip’ in prices meant inflation is likely to be up when the latest figures are published.

Internal Treasury analysis suggests it rose from 6.8 per cent to more than 7 per cent in August, fuelling fears of another interest rate hike. 

Mr Hunt said prices would then start falling again in the autumn. But business leaders warned that firms would need additional help with business rates which normally rise in line with the September inflation figures.

Kate Nicholls, chief executive of UK Hospitality, said the prospect of another rise was ‘hugely concerning for hospitality businesses whose business rates bills are set to rise by next set of inflation figures’.

The Chancellor said a ‘blip’ in prices meant inflation is likely to be up when the latest figures are published

She said it meant the sector faced paying almost £1 billion extra in tax bills, explaining that was why she was ‘urging the Chancellor to freeze rates and retain hospitality rate relief’.

Asked about soaring government debt levels, Mr Hunt acknowledged yesterday: ‘You have to grow the economy so that your GDP is bigger and you are able to manage the same level of debt as a lower proportion of your overall costs.

‘That is very important for people’s taxes and people are finding that taxes are very high as we have high debt interest.’

Mr Hunt said there was ‘nothing’ he wanted to do more than cut taxes. But he said it would require economic growth along with greater public sector efficiency. 

He warned that at the current rate of public spending rises, ‘tax revenues would need to increase by £200 billion by 2071 in today’s money – double the basic rate of income tax’ in order to fund services such as the NHS. 

The Chancellor told the BBC’s Laura Kuenssberg show: ‘What we need to do now is restart the public service reform agenda. It’s not about asking people to work harder. They work very, very hard, but it’s about using money more efficiently.’

The surge in prices also increases the risk that the Bank of England will raise interest rates for a 15th consecutive time when the Monetary Policy Committee meets later this month.

Millions of homeowners already face huge rises in mortgage payments after the Bank raised base rates to a 15-year high of 5.25 per cent last month. However, the ‘blip’ in inflation may benefit pensioners, as the annual rise in the state pension is based in part on the September figures.

The Chancellor told the BBC’s Laura Kuenssberg show that money needed to be used more efficiently by restarting the public service reform agenda

The predicted rise in inflation is a blow for Prime Minister Rishi Sunak, who has made halving the headline rate his top goal for this year.

But he was enjoying an well-earned break yesterday as he joined King Charles and Queen Camilla at Crathie Kirk, a church near Balmoral while spending the weekend on the monarch’s Scottish estate.

Mr Sunak’s wife Akshata Murty wore a £1,295 turquoise ‘Clemence’ coat by Shropshire-based couturier Claire Mischevani – who also designed the blue dress she wore to the Coronation. She complemented it with a £285 ‘Golborne’ trilby hat by milliner Jess Collett and tan stilettos.

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