A further rise in interest rates will not just cause pain for mortgage-buyers but will put a further squeeze on the beleaguered hospitality sector, Liverpool chef Paul Askew says. Tony McDonough reports

Liverpool chef and restaurateur Paul Askew claims further rises in interest rates will see more food and drink businesses going to the wall.

On Thursday it is expected the Bank of England will raise interest rates for the 13th month in a row as latest figures show UK inflation remains stubbornly high. The latest headline CPI inflation figure is unchanged at 8.7% with analysts expecting a drop to 8.4%

And core inflation actually rose in May to 7.1%, the fastest pace since 1992. Interest rates are currently at 4.5%. Bank policymakers could put this up to 4.75% or even 5%.

It means many mortgage-payers now face eye-watering rises in their monthly repayments. And this, said Paul Askew, is likely to have a devastating impact on a hospitality sector that has already faced more than three years of crisis.

COVID saw bars and restaurants closed for long periods, although this blow was partly cushioned by Government grants. No sooner had the sector emerged from the pandemic the Russian invasion of Ukraine sent energy and food prices soaring.

Many businesses have not survived this crisis and Paul, chef patron at The Art School restaurant, fears this further squeeze on disposable incomes will worsen the situation.

He said: “Even if some of the impact will not be felt until next year when mortgage deals end and need to be renewed, the narrative of the population’s disposable incomes tightening is not going away.

“And there’s only so much punishment consumers can take. This is going to pile even more pressure onto hospitality businesses already on the brink.

“Every week in Liverpool, independent eateries announce their closures. For many hospitality operators across the UK, there’s nothing left in the bank, no room to manoeuvre.

“There’s been no post pandemic recovery because we’ve been assailed by food service inflation breaching 20% again, the ongoing cost of living crisis, higher utility bills, no reduction in VAT, archaic business rates and ongoing and unresolved staff and supply chain issues, compounded by Brexit.

“This means even more businesses will suffer and close down in the coming weeks and months. Do we want high streets filled with identical chain options only?

“Do we want to see the independent suppliers across the land fail, because there is no one left to supply to? How do we nurture the next generation of skilled workers in hospitality.”

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Paul acknowledged that there were external factors, such as Ukraine, out of the control of the Government but he insisted there were measures ministers could take.

“We continue in our belief that a VAT reduction would help enormously, certainly to 15% or 10%,” he added.

“Such a difference now, for many restaurants, bars, hotels, clubs and pubs, is going to be the literal difference between surviving or failing, as consumers are forced to make ever tougher spending decisions based on diminishing incomes.”