Interest rates hike ‘will drive business failures’

Hospitality Ulster has warned the latest increase in interest rates by the Bank of England could put more hospitality businesses under and drive the economy into recession.

Chief Executive Colin Neill spoke out following the decision to put rates up for 13th consecutive time, from 4.5% to 5%.

He said: “This is another day when the Bank of England has tried to grapple with a sustained high level of inflation despite being told it would be under control by now. Whilst we recognise this is the only tool that the Bank of England has at its disposal, increasing interest rates will most likely drive us into a recession.

“To the layman, it feels like this is deliberately intended to cause business failures, job losses and drive down demands for increased wages. Attempting to control inflation through fear of losing your job or causing business failures seems like a very cruel and unfair fiscal policy.

“It is no secret that the impact of high food costs is hurting both the consumer and businesses within the hospitality sector as they both struggle to make ends meet. Profitability on food within our sector is now at rock bottom and without change will drive businesses to the wall.

“This is going to be made worse at the end of July when significant increases in alcohol duty come into effect, causing government driven inflation as hospitality businesses struggle to absorb the large duty increases and are forced to pass them on to the consumer.

“We are not expecting handouts from Government, but they need to change course and stop driving further inflation by avoidable tax increases.”