What does Brexit mean for Hospitality?
Brexit: Britain’s new favourite dirty word.
The UK’s decision to leave the EU has left a plethora of unanswered questions up and down the country.
While it is safe to say that all the UK’s industries will be affected by Brexit, the future of the hospitality industry is extremely uncertain. Around 15% of the UK’s hospitality workforce is made up of EU citizens and the British Hospitality Association has warned that new immigration laws could cause a 60,000 person per year problem.
Hospitality is Britain’s 4th Biggest Industry employing 4.49 million people. It represents 10% of the country’s GDP, equivalent to £43 billion.
The BHA estimated that 700,000 or 15% of the 4.5 million workers are people from the EU, with London having the highest number of EU workers at 35-40%. With 34% of the hospitality workforce being under 25, the BHA said the UK has enormous potential to create a young skilled workforce. However, as an EU member state, the UK has received many subsidies in relation to provision of apprenticeships and skills. The European Social Fund budgeted 80 million euros from 2014-2020 and a further 3.2 billion euros to the Youth Unemployment Fund. “The loss of this funding would be detrimental to youth employment and the UK”, the BHA said.
How will Brexit impact businesses?
The effect of Brexit is already hitting hospitality businesses across London. Grind, a chain of popular coffee and cocktail bars is feeling the effect. Grind’s head of coffee Sam Trevethyen told us that everyone has felt the slump in the global markets:
“We buy and roast coffee internationally. These purchases are in dollars so it has certainly affected Grind. We also purchase coffee equipment from Europe, which has had a big effect on the company with prices increasing by 5-10%”
One of the most concerning factors for the UK hospitality industry following Brexit is staffing. Many establishments reply on people from all over Europe to work, especially in London.
“London is always very tight for good hospitality staff and people not knowing what will happen is certainly a turn off when investing in moving here. I think that most people have no idea just how vital Europeans are to this industry, especially in London,” Sam said.
London brewers FourPure are also feeling the hike in prices. Head of New Business Development Rob Davies said that the company has already had to reassess the export market.
“As a young business (3 years) we have to invest all of our available funds into the expansion of the brewery to provide our domestic market with beer. 70% of our beer is sold in the UK, with 60% of that being sold in London alone.”
The cost of all ingredients has also risen, along as the higher duty for alcohol rate hitting Fourpure due to their production levels.
An Uncertain Future
In the future, Rob thinks Brexit will shrink the export a little temporarily while they gain confidence in the future potential Government and how hard or soft Brexit is.
“If any parts of the deal are challenged with certain countries, we may not have access to that country as it may become cost prohibitive.”
With the hospitality industry doing everything it can to try to save both staff and money, the one certainty is that those in industry will continue to fight for what they believe in and continue to give their all.