Spring Forecast 2025 Wish List: Hospitality & Leisure

With inflation rising to 3.0% in January 2025, the pressure is mounting for businesses across the H&L sector. The government has made it clear that economic growth is its main mission, so we are hoping the Spring Forecast introduces measures to boost growth and ease inflationary pressures, ultimately giving H&L businesses much-needed relief from rising costs.

With rising minimum wages and increased National Insurance contributions from the Autumn Statement, businesses are grappling with higher staffing costs. The sector desperately needs incentives to attract and retain talent. Let’s hope the government rolls out schemes to ease the recruitment challenges in the H&L industry.

The UK has one of Europe’s highest VAT rates on hospitality and leisure services at 20%. This rate is potentially hurting margins and pushing prices higher in an already inflationary environment. Cutting VAT would not only ease the strain on businesses but also potentially lower prices for consumers, encouraging more people to dine out and giving the economy a much-needed boost.

The Autumn 2024 Statement included changes to Business Property Relief, limiting its value to £1m when passing on a business to the next generation. For H&L businesses with significant property assets, this could be a major cost. While a reversal would be a welcome surprise, we are not expecting any movement on their stance.

H&L businesses with international operations are facing a new challenge with the multinational Pillar 2 tax. The US has opposed its implementation, creating confusion and uncertainty for global businesses. A clearer roadmap from the Spring Forecast on how UK-based companies will be affected—especially if the US continues to block the tax—would provide much-needed clarity for the sector.

While the H&L sector would love to see increased spending and tax relief for businesses and workers, the government’s messaging suggests we may face more spending cuts rather than any major changes. With the Autumn Budget already making a big impact, it’s unlikely we’ll see a transformative Spring Forecast in 2025.