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Hung Parliament: What does it mean for hospitality?

09 June 2017 by
Hung Parliament: What does it mean for hospitality?

The hospitality industry was left scrambling to understand what a hung Parliament means for the sector after the Conservative party failed to win an overall majority.

Theresa May's bid to create "stability and certainty" ahead of Brexit negotiations, which start in just 11 days' time, by building a solid majority in the House of Commons, appear to have failed.

Labour leader Jeremy Corbyn, whose party performed better than expected, winning 261 seats (a gain of 29 seats) called on the prime minister to resign.

However, May has refused calls to do so and will attempt to form a government.

Commenting on the result, Ufi Ibrahim, chief executive of the British Hospitality Association, said: "The general election result means that we will be faced with the reality of greater and continued political uncertainty in the short term and that is bad for the economy and business. This is the last thing the hospitality and tourism industry needs as we already face a ‘perfect storm' of issues but the BHA will work with whatever government emerges to see a return to stability and certainty so that we can get on with creating jobs and growth in the economy."

ALMR chief executive Kate Nicholls said that the result left "a vacuum where businesses need clarity and certainty".

She added: "It is of paramount importance that any new government is in place swiftly, in order to address the immediate and desperate needs of hospitality businesses trying to operate amid the cost burdens of business rates, the National Living Wage and the many other current pressures on pub and restaurant operators."

Meanwhile, EU commissioner Gunther Oettinger said that talks about Britain leaving the EU might not now start as planned.

Speaking to German radio, he said: "We need a government that can act. With a weak negotiating partner, there's the danger than the negotiations will turn out badly for both sides… I expect more uncertainty now."

Paul Hardy, Brexit director at law firm DLA Piper, said the result would pose significant challenges for business.

"Businesses may find it even more difficult to make big decisions on jobs and investment, given this result's implications for Brexit negotiations, as well as on coherent policy making at home," he said.

But not everyone shared that view. Simon French, chief economist at investment bank Panmure Gordon, added: "The result is good news for the UK growth outlook as it reduces the likelihood of Brexit taking place, and certainly diminishes the likelihood of a hard Brexit."

Following the result of the election, which has so far seen the Conservatives lose 12 seats, dropping to 315 (11 short of an overall majority of 326), the pound has fallen sharply, standing 2.3% lower at just below $1.27, and down 2% against the euro at 1.1344.

That could have the effect of pushing the price of food even higher, with food inflation already running at 5.8% in April, according to the latest Foodservice Price Index from Prestige Purchasing and CGA Strategy.

Commenting on the election result, Rachel Dobson, managing director of buying specialist Lynx Purchasing, said: "In the latest edition of the Lynx Purchasing Market Forecast, we said that hospitality and catering businesses needed a period of stability to help counter the effects of food and drink inflation. A hung Parliament makes that extremely unlikely, and the financial markets have already started to react.

"A weaker pound will mean higher prices for many catering staples, and operators will have to plan their menus accordingly. Working closely with suppliers to make the most of seasonal availability, and examining every cost centre to see where savings can be found, will be more important than ever."

Follow The Caterer on Twitter @caterertweets and follow our news on www.thecaterer.com/news for more reaction to this unexpected general election result throughout the day.

Accelerated wage inflation puts pressure on hospitality employers >>

Food and drink business confidence stalls >>

Price inflation in foodservice hits 5.8% >>

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