Business investment in hotels and restaurants has plummeted by more than 10% in a year as worries over Brexit loom large, analysis by specialist tax consultancy Catax has suggested.
Total business investment in the sector fell by 12% to £4.97bn in the first three quarters of 2018, down from £5.67bn for the same period in 2017, the tax firm’s analysis of figures from ONS showed.
Catax said this was indicative of a wider slowdown in the British economy which grew at its “most sluggish rate for six years” in 2018. Overall business investment dropped from £46.9bn to £46.2bn for the fourth consecutive quarter in 2018, the first time that has happened since the economic downturn in 2009.
With an estimated 442,000 EU migrants working in Britain’s hotels and restaurants, there is rising concern about how the industry will cope with the fallout of Brexit after 29 March.
Uncertainty over future border and travel rules could also hit the British hospitality industry as people opt not to book UK visits until they know what the result of the negotiations will be.
Mark Tighe, CEO of Catax, said: “This steady collapse in business investment across the hotel and restaurant sector is a clear sign of crumbling confidence and it’s fairly obvious that Brexit uncertainty is the driving force behind it.
“The hospitality industry will be hugely affected by whatever deal, or no deal, we emerge with at the end of March so it is not surprising that businesses are holding off on investment decisions until they know the outcome.”
He added: “This stagnation is damaging our economy at a time when we need it to be performing better than ever. Tax relief on much business investment is available, but that on its own may not be enough to see a recovery in these numbers. Politicians will need to move fast to restore confidence and give investors the certainty they need to take the bold decisions.”