UK recession 'a big worry', says UKHospitality

The UK has fallen into a ‘technical’ recession, according to the latest data from the Office of National Statistics (ONS).

UK gross domestic product (GDP) is estimated to have dropped by 0.3% in the fourth quarter of 2023, following an unrevised fall of 0.1% in the previous quarter. Two or more consecutive quarters of contracting output equates to a recessionary trading environment.

Hospitality sector performance contributed to these declining figures, as overall, consumer-facing services fell by 0.7% in 2023’s final quarter, largely driven by a drop in food and beverage service activities and retail trade.

However, this offset a growth in accommodation services, particularly hotels, which the ONS reported as performed strongly in Q4 2023. This follows an unrevised fall of 1.0% in consumer-facing services in the third quarter, the largest decline in the sector since the first quarter of 2021, mid-pandemic.

Kate Nicholls, chief executive of UKHospitality, said: “The economy officially entering a technical recession is hugely concerning. Consumer confidence has already taken a huge hit over the past year as the cost-of-living crisis bites and today’s news will dent it even further.

“That will be a big worry for hospitality businesses up and down the country, as they need support from consumers more than ever.”

She urged the chancellor to recognise the hospitality sector's track record of driving growth and repeated the industry’s call to lower VAT for hospitality, as well as capping business rates increases.

“This would allow venues to reduce those incredibly high business costs and keep price rises at bay – that would be good for the public, businesses and the economy,” she added.

The British Beer and Pub Association’s chief executive Emma McClarkin added: "Today’s official figures indicating that the UK economy is in recession is extremely worrying and indicates that there will be no let-up in the pressure facing the beer and pub sector.

“It underlines the importance of the chancellor loosening the economic vice grip on breweries and pubs by cutting beer duty, capping business rates and introducing a pub specific VAT rate at the spring budget in just over two weeks.”

While the second half of 2023 marked an economic downturn, the ONS did estimate that, across the whole year, GDP increased by 0.1% compared with 2022.

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