Brexit Danger for the Hospitality Sector

Evidence seems to suggest that the summer season has been very busy throughout the UK hospitality sector. There is anecdotal evidence that terrorism concerns overseas and the weak pound have both contributed to this trend. However, the Brexit vote sends out a warning signal to all who rely heavily on overseas labour. Hospitality is one of the sectors that may be most affected if the movement of labour is controlled.

Economic impact

The UK hospitality trade contributes massively to the economy:

  • It has an estimated turnover of £90bn.
  • It is worth £46bn to the economy in terms of profit and wages.
  • It employs an estimated 2.44 million people directly and a further 675,000 in the supply chain. This represents around 8% of total employment in the UK, making the sector the 5th largest employer nationally.

Since 2009 the number of migrants that are employed in the UK hospitality trade has increased by 29% with UK nationals now only accounting for 76% of the overall workforce. It is anticipated that the growing demand for employment in the sector will continue to be mainly met from overseas, further increasing reliance on non-UK nationals.

Brexit negotiations

As we head towards the negotiations for Brexit the industry faces huge problems if controls are placed on the freedom of movement of labour. Employers would find it challenging to recruit for posts at all levels in their organisation. It would appear that the only way this issue could be addressed would be to increase pay rates to make the jobs more appealing to the UK nationals, which would inevitably lead to increased prices for consumers or lower margins for operators.

If you have any questions or would like to discuss the needs of your tourism or hospitality business please contact our team on 01903 234094.

A version of this blog originally appeared on the website of one our MHA association member firms, Moore and Smalley.