The Budget – Impact on the leisure and hospitality sector

BUDGET 2011

“This budget has done little for little for leisure operators.” so says Mark Sheehan, Managing Director of Coffer Corporate Leisure

By raising the nil tax threshold, the army of lower paid employees working in the hospitality sectors will benefit in the short-term, but by increasing the burden on those businesses who employ these people with seemingly endless cost increases, how can they be relied on to sustain the economy? The Budget offers little help to alleviate pressure on operators’ suffering and does little to kick-start consumer spending. Altogether, the net increase in income tax and national insurance against savings for many earners will hit consumer spending further . This is compounded with the recent VAT increase in December and the outstripping of wage increases by inflation – a hard combination to bear for operators.

With 4-5% predicted inflation for the year above compared to 1.7% predicted growth in the economy , this further illustrates a very tough trading environment for the leisure and hospitality sector, which employs over two million people and adds £19 billion to the UK economy every year. Operators need more help than they are being offered in this budget to help lead the economy out of recession and creating local jobs at a time when national unemployment levels are so high. In provincial areas especially, the hospitality sector should be better supported in keeping jobs alive and therefore helping to sustain the economy.

On a positive note the increase in EIS relief will help to attract investors in small businesses. With bank debt all but gone for many, raising cash by selling equity in the answer and this tax relief will help. We are helping many small businesses expand in this way.

Notwithstanding the issues facing operators as a result of the Budget, there is a sense of optimism amongst investors within the leisure and hospitality sector. We believe we are now past the bottom of the cycle and investors are piling in to invest in strong businesses. We are now in a recovery phase. Many deals will be done in the months ahead. “

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Category: News, Spirits, Whisky

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