SCOTLAND’S home-grown restaurants, hotels, pubs and clubs have been among the worst hit. First closed by the pandemic, then battered by Brexit, and now floored by energy bills and inflation, the outlook in the wake of the Autumn Statement is not good.
“There is nothing in it that gives us a fighting chance to get through the next few months – the future is grim,” said Colin Wilkinson, a licensed trade industry representative. Can anything be done?
There is now a chorus calling for action that includes help on the taxation of businesses in Scotland ahead of the Scottish budget from John Swinney, Deputy First Minister and acting Finance Secretary, which is due next month.
“The reversal of the freeze on alcohol duty will also hit businesses and customers alike with the cost of a pint increasing by more than just inflation,” said Mr Wilkinson, managing director of the Scottish Licensed Trade Association.
“Businesses are already closing or reducing their opening hours – the chronic shortage of staff as a result of Brexit is contributing to that – but we predict further closures.
“We welcome the Chancellor’s pledge to ‘soften the blow on businesses with a nearly £14 billion tax cut over the next five years’ which will mean nearly two-thirds of properties will not have to pay more on business rates – pubs and restaurants will benefit from that and we hope that the Scottish Government can give us more information on that soon.”
Tracy Black, CBI Scotland director, said: “Backing the CBI’s call for a freeze in business rates and smoothing the increase for those facing higher bills is very welcome. We would now ask the Scottish Government to follow suit.”
One family hotel’s energy bill has trebled to £1.5 million, and they don’t have the same capacity to offset costs as multinationals.
October was the 15th month of accelerating food and drink inflation, with prices rising by 16.4% compared to a year ago, which is estimated to be the highest since September 1977.
David Thomson, Food and Drink Federation Scotland’s chief executive, said: “On average manufacturers have seen a 21% rise in their costs over the past year, with the high cost of energy particularly significant.”
He had called for "simplifying regulation, reducing the cost of trade with the EU, and helping companies to invest in growth, innovation and skills".
Elsewhere, “grim” was also the description from Paul Johnson of the Institute of Fiscal Studies as real household disposable income is set to fall by seven per cent over next two years.
— Paul Johnson (@PJTheEconomist) November 18, 2022
Business correspondent Kristy Dorsey writes that Mr Hunt’s statement was branded “high on stealth-creation and low on wealth-creation” by Martin McTague, of the Federation of Small Businesses.
“While tackling inflation is essential, so are measures to create conditions for prosperity, growth and support enterprise,” Mr McTague said. “Today is a missed opportunity to avoid further economic slowdown.”
He said the Budget “will ramp up the costs of employment without offsetting that”.
Business editor Ian McConnell takes a trip back to the heyday of a Scottish airport this week, but one which remains a very important part of the Ayrshire and broader Scottish economy.
“Prestwick Airport … has now reported profits for three consecutive financial years,” he writes.
Also this week, deputy business editor Scott Wright shines a light on the latest plans for a tourist tax in Scotland, asking, is this the right time for such a move?
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