The United Kingdom’s vital hospitality sector has borne the brunt of recent economic pressures, shedding nearly 89,000 jobs since last October’s Autumn Budget. This figure represents a devastating 53% of all job losses recorded across the UK during the same period, a statistic that industry leaders describe as “staggering.” The scale of the downturn is seven times greater than the rate experienced by the wider UK economy, highlighting the disproportionate impact on businesses from pubs and restaurants to hotels.
The Extent of the Crisis
Analysis of Office for National Statistics (ONS) data by the industry body UKHospitality reveals that out of a total of 164,641 job losses across the nation since the October 2024 budget, almost 89,000 occurred within the hospitality industry. This far exceeds the Office for Budget Responsibility’s (OBR) initial prediction of 50,000 job losses stemming from fiscal policy changes. The findings indicate that one in every 25 jobs within the hospitality sector has been eliminated, equating to 4.1% of its total workforce. This severe contraction contrasts sharply with periods of job creation, with reports noting that in the same period the previous year, the sector had actually created 18,000 jobs.
Root Causes: Tax Hikes and Rising Costs
The primary driver behind this significant job shedding is identified as the increase in employer National Insurance Contributions (NICs), particularly the lowering of the threshold at which these contributions become payable. This change, which took effect in April 2025, has placed an additional financial burden on businesses, especially those that rely on part-time and flexible staffing models – a cornerstone of the hospitality workforce. Experts warned that these changes would disproportionately affect firms employing large numbers of lower-paid workers, who are often younger and in flexible roles.
Beyond NICs, the sector is grappling with a confluence of other rising costs. These include increases in the National Living Wage, escalating energy bills, higher ingredient prices, and reduced business rates relief. The cumulative effect of these pressures has created an unsustainable operating environment, forcing many hospitality businesses to make “agonisingly tough decisions to cut jobs” in order to survive. This challenging economic climate is also impacting investment and recruitment plans, with concerns that further job losses could occur without intervention.
Industry’s Plea for Government Support
UKHospitality, along with prominent figures in the sector, has intensified its calls for urgent government action. Kate Nicholls, the chief executive of UKHospitality, has repeatedly stated that the sector is being “taxed out of existence.” The organisation is advocating for a series of measures to be implemented in the upcoming budget, including a reduction in VAT for the hospitality sector, a lowering of business rates to stimulate high streets, and adjustments to National Insurance Contributions. They also propose extending existing NIC exemptions to cover young people and those transitioning from welfare to work.
“The number of job losses suffered in hospitality since the budget is staggering,” Nicholls commented. “More than half of all job losses since October occurring in hospitality is further evidence that our sector has been by far the hardest hit by the Government’s regressive tax increases.”
The Treasury has acknowledged the challenges, pointing to measures such as extended business rates relief and reduced licensing fees to support outdoor dining. However, industry representatives argue these measures are insufficient to counter the substantial financial strain.
Broader Economic Impact and Future Concerns
The hospitality industry is a major contributor to the United Kingdom’s economy, employing approximately 3.5 million people and ranking as the third-largest employer. The current trend of job losses threatens not only livelihoods but also the sector’s capacity to drive economic growth, attract investment, and maintain its role in communities across the nation. Without decisive government intervention, industry leaders warn that the current trajectory could lead to a further decline, potentially resulting in more business closures and job cuts.
This unfolding situation is a key piece of business news, underscoring the immediate need for supportive policies to ensure the resilience and recovery of one of the UK’s most dynamic and employment-rich sectors.
