By Thomas Brandes and Beatrice Morandi
As the UK has now officially entered an economic recession, the consequences of Brexit are more noticeable than ever. After four years, the decision to leave the European Union is widely regarded as catastrophic and regrettable.
The Trade and Cooperation Agreement (TCA) signed with the EU in January 2021 has done little to appease the direct effects Brexit has had on the UK economy. Figures indicate that UK real GDP is 2-3 percent lower, compared to a scenario in which Brexit never happened.
The UK has recorded 0% growth in exports and 19% growth in imports in the time period between 2019-2022. Very simply put, it is buying more, while selling the same amount. Looking at these figures and seeing that the country is already in substantial debt after a decade of austerity policies, Chancellor Jeremy Hunt’s plans to lower taxes by cutting funding for the public sector, are questionable at the very least.
In the same time period, the UK only recorded 0.87% real GDP growth with only Mexico, Japan, Spain, Italy and Germany performing worse. This shows signs of a stagnating economy that is struggling to recover from Brexit, the pandemic, and the surges in energy prices after Russia’s invasion of Ukraine.
The hospitality sector is currently facing a significant challenge in the wake of Brexit, particularly regarding the potential impact on the workforce. For many years, the industry has depended heavily on workers from other EU nations to fill crucial roles such as chefs, waiters, and hotel personnel. The free movement of labour afforded hospitality businesses access to a diverse pool of talented individuals from across the EU.
But with the implementation of Brexit, the ease of hiring EU nationals has been curtailed, as people working in the sector have not been classified as skilled workers able to gain visas more easily, leading to a shortage of labour in the industry.
Angelica Baragliu, 34, General Manager of Lina Stores in Soho, said that most of the staff employed are Italians, especially for managerial roles. However, they are currently facing difficulties in finding skilled individuals who are willing to work in the restaurant industry. The UK only offers visa status for high-level positions, making it almost impossible to find waiters, commis chefs, or kitchen porters, who are the foundation of the hospitality industry.
The end of free movement has made it challenging for UK hospitality businesses to recruit skilled workers, and many have reported difficulties in finding suitable replacements for the EU workers who have left since the Brexit referendum. The uncertainty surrounding the settlement status of EU nationals already working in the UK has also added to the industry’s challenges.
As a result, the hospitality sector is now at risk of labour shortages, which could lead to increased labour costs, operational inefficiencies, and a decline in service quality. The consequences of these labour shortages could be detrimental to the industry’s success, making it critical for businesses to find alternative solutions to ensure they continue to meet their staffing needs.
Spike Wright, 18, a freelance hospitality worker, said that employers are “struggling with staff because nobody wants to do hospitality jobs in this country. Then people who voted for Brexit are complaining hospitality are understaffed.”
He added that “the economy has taken a massive hit and we are entering a recession, this may not be 100% Brexit’s fault, but it is one of the main reasons. Our prices are rising, it is harder for people to come to the UK and hard for people in the UK to move elsewhere.”
Searching for innovative solutions
The UK’s decision to leave the European Union has led to some economic uncertainties, which have had an impact on the hospitality sector. However, businesses have been adapting to these challenges by implementing innovative solutions to remain competitive and to keep customers happy.
While the depreciation of the pound has led to increased costs for imported goods, such as food and beverages, hospitality businesses have been exploring new ways to source locally produced items and to reduce costs. Additionally, businesses are keeping a close eye on the developments regarding trade agreements, regulations, and import tariffs to make informed decisions and plan for the future.
Despite the slowdown in consumer spending and changing behaviors, the industry seems resilient and constantly innovating to provide customers with new experiences and offerings.
Brexit has resulted in regulatory changes that affect the hospitality sector’s operating environment. If the UK diverges from EU regulations and standards, it could lead to additional compliance costs in areas such as food safety, employment law, and data protection. Moreover, changes in immigration policies and visa requirements have added administrative burdens for hospitality businesses, especially those that rely on international talent to supplement their workforce.
The uncertain future regulatory landscape has made it difficult for businesses to plan and adjust to potential changes. The lack of clarity on issues like tariffs, customs procedures, and product standards has created an atmosphere of uncertainty, which makes it challenging for hospitality businesses to navigate the post-Brexit regulatory environment.
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