Investment in hospitality businesses slumped by 12% year-on-year in the first three quarters of 2018.
Investment sunk to £4.97b across the sector according to specialist tax consultancy Catax, who attributed the fall to concerns over Brexit and particularly its impact on staffing.
The fall is indicative of that seen across the British economy, which recorded the most sluggish growth in six years.
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.
"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."Get The Caterer every week on your smartphone, tablet, or even in good old-fashioned hard copy (or all three!).