Rising public sector borrowing figures have sparked fresh fears within Scotland’s hospitality industry, with sector leaders warning that current government policy is threatening thousands of jobs and undermining economic recovery.
The Scottish Hospitality Group’s director, Stephen Montgomery, has voiced deep concern that the latest fiscal developments, coupled with the prospect of further tax hikes and mounting cost pressures, are placing unprecedented strain on hospitality businesses across the country.
As operators brace for the upcoming autumn budget, industry stakeholders are intensifying calls for urgent government intervention to prevent further job losses and safeguard the sector’s future amidst ongoing uncertainty.
Responding to the public sector borrowing figures, Stephen Montgomery, Director of the Scottish Hospitality Group, said:
“This is quite worrying, especially when the government say their main priority for the country is to kick start economic growth”.
“This will certainly place doubts and worry in the minds of many hospitality operators ahead of the autumn budget, where the worry will be that Rachel Reeves will come at the sector yet again with more tax rises, especially after what we saw in the last budget where the Chancellor hit employers with a devastating financial blow of a rise in employers’ national insurance contributions”
“What we have seen since the budget, has been the stalling of recruitment across the sector, with many businesses cutting operating hours, cutting employee hours, and in many cases cutting back on staff to help manage the ever increasing cost pressures we see in a sector which wholly relies on consumers having disposable income to spend in their venues.”.
“We now know that 84000 jobs have been lost in the sector, equating to 45% of all jobs lost since the budget, making it the hardest hit sector; and a large part of the blame for this lies with UK Government policy choices”
“What needs to happen now is that both UK and Scottish Governments need to pull all levers available to them to help the sector, including the UK Government reducing the VAT rate to 12% for the sector, reversing the crippling increase in employers national insurance contributions, and from the Scottish Government, we need to see as a priority, reform of the non-domestic rates system for licensed hospitality”
“We have secured an independent review of the non-domestic rates for licensed hospitality, which will be held in 2026, but the implementation of any findings may not take effect until the next revaluation in 2029, so bridging support will be needed to cover that timeline.
“This is even more important now, given that the UK Government are set to reform the business rates policy for England in 2026, which will again leave Scottish licensed hospitality businesses at a disadvantage if there is no support afforded to them”
