Total business investment in the sector fell by 6% to £1.26bn in the first quarter of 2020, down from £1.34bn for the same period in 2019, the latest ONS figures have revealed.
Catax said this is indicative of a “wider slowdown” in the British economy, which shrunk by 10.4% in the three months to April 20202.
Overall business investment across UK industry rose 0.8% compared with the first quarter of 2019.
Catax said it comes as the coronavirus has hit the hospitality industry hard, with restaurants and hotels suffering from months of closure and has warned that many Industry leaders have expressed fears that even the reopening from July 4 “will not be enough” to save many businesses.
Mark Tighe, CEO of tax relief consultancy Catax, said: “The hospitality industry has been hammered by coronavirus, and the decline in business investment is a symptom of its dramatic impact on the sector. This will weigh heavily on the ability of hotels and restaurants to get back on their feet.
“Industry leaders are cautious about the future, even with the appealing prospect of reopening on July 4, and it will be a long time before hotels and restaurants are able to get back on a secure financial footing.”
He added: “The government’s tax relief schemes, which in the past have awarded R&D tax credits to restaurants for projects including developing new menus, remain available and will prove crucial for some businesses as they seek to recover. Politicians will need to move fast to restore confidence and give investors the certainty they need to take the bold decisions.”