27 January 2026: Four hospitality businesses are closing a day under Labour

The hospitality sector has been decimated by the changes in business rates announced by Rachel Reeves in her budget last November. Close to four outlets a day are closing as cafes, pubs, restaurants and hotels struggle with the end of business rates relief.

Last week, the Chancellor refused to budge on throwing a lifeline to hospitality firms outside of pubs despite pleas from hotel bosses to save jobs.

Earlier this month, she bowed to pressure from landlords, many of whom banned Labour MPs from their pubs, and hinted that watering holes would be given concessions on the end of pandemic-era support.

But industry groups such as HospitalityUK and business owners have warned that more cafes, restaurants and hotels will be left with no choice but to shut up shop if similar measures are not put in place for other parts of the sector.

In a letter to Rachel Reeves, more than 130 hotel bosses said last week that soaring business rate bills are 'the most significant challenge' faced by the industry.

Allen Simpson, Chief Executive of UKHospitality, told reporters: 'The cost challenges facing hospitality businesses continue to grow, and four businesses closing a day in the last quarter of 2025 is the unfortunate reality of a sector shouldering the highest tax burden in the economy.

'Every part of hospitality is impacted by rising costs and business rate hikes, and restaurants are among the most affected by this latest spike in closures.

'It reinforces the need for a hospitality-wide solution to avert the looming business rates increases.

'Without a solution that benefits the entire sector, we will inevitably see business closures and job losses accelerate this year.'

The government says that, outside of the imminent help for pubs, it is supporting hospitality businesses with a £4.3 billion support package to limit bill increases, alongside a 25 percent cap on corporation tax.

Firms have also had to figure out how to compensate for rising rents and energy costs without hiking prices to the point of losing customers.

It comes days after the Office for National Statistics (ONS) revealed a 70,000 drop in the number of payrolled employees in hospitality in 2025, including almost 9,000 jobs lost in December alone.

The Bank of England will hold its benchmark interest rate at 3.75% at its February meeting, due next week, according to all but two economists polled by Reuters, with only a small majority now expecting it to fall to 3.50% in March following a run of better economic news.

With inflation still the highest among G7, the nine-member Monetary Policy Committee has been tightly split at the last few meetings, most recently in December when it voted 5-4 in favour of a quarter-point rate cut.

The decision to keep Base Rate unchanged this month may be less hotly debated, given recent news of the strongest private sector business growth since April 2024, alongside unexpectedly strong retail sales and inflation rising further from the MPC's 2% target.

Most economists expect inflation to fall again in the coming months and for strong wage growth to continue decelerating as unemployment creeps up. But there is likely not enough compelling data to justify a majority vote to cut rates again.

Of the 56 economists surveyed in a January 21-26 poll, all but two expected the BoE to hold Bank Rate at its February 5 meeting, when it releases its updated quarterly economic forecasts, in line with market pricing. The remaining two forecast a cut to 3.50%.

Some members of the Committee see risks to the economy arising from both inflation and the rising number of jobless. This has led to a degree of fence-sitting from its more hawkish members.

Urgently improving the UK's trade links with the EU is the easiest and most effective way to grow the UK economy, campaigners have stressed, following reports of private-sector expectations of a downturn.

Businesses are reportedly forecasting a slump in economic activity over the next quarter, according to the CBI’s Growth Indicator.

Alpesh Paleja, CBI deputy chief economist, said the latest research indicated "persistently weak growth expectations" and highlighted that the "UK economy has not experienced a strong start to 2026", while "recent geopolitical tensions will only have added to uncertainty at the margin".

Businesses and the British public have been pummelled by economic headwinds, damaging international trade, hurting jobs and restricting investment, and this already bleak picture has been made much worse by the UK leaving the EU.

Firms do need support with energy costs, but the easiest and most effective way to grow the UK economy remains urgently improving Britain’s trade links with our closest and largest market, as voters have long made clear they expect the government to prioritise.

The pound gained more ground against a weakening dollar yesterday, reaching its highest level since early July. It climbed to a high of 1.3713 and closed at 1.3680.

Despite all the innovations that have come to market with the technical advances of the past 25 years, it is the oldest market in the world that illustrates investors' concerns about the polarisation of the U.S., leading them to move heavily into gold.

The price of the “yellow metal” is often the most reliable indicator of global economic stress. It has reached a new all-time high over the past few weeks as investors anticipate President Trump's intentions. Yesterday it closed at $5,068. This spike in price dwarfs the previous two, caused in the seventies by the oil embargoes, and in 2012 by fears that the EU may be on the verge of collapse.

As far as the domestic economy goes, it is chugging along at an annual growth rate above 3%. However, investors doubt the predictions of Trump and Bessent, who have both said recently that an annual growth rate of 5% is possible this year.

Orders for durable goods, often the most volatile of statistics, increased in November by the most in six months, boosted by bookings for commercial aircraft and other capital equipment.

Orders for durable goods, items meant to last at least three years, rose 5.3% after a revised 2.1% decline a month earlier, according to a Commerce Department report that was delayed by the Federal Government shutdown.

The data published yesterday also showed that core capital goods orders, a proxy for investment in equipment that excludes aircraft and military hardware, increased by a larger-than-forecast 0.7%.

The Commerce Department’s report showed bookings for commercial aircraft, which are volatile from month to month, increased nearly 98%. Boeing Co said it received 164 orders in November, up from 15 in October and 175 the previous month.

The January Fed meeting kicks off next Tuesday, January 27, and concludes on Wednesday, January 28, with the Central Bank's latest policy decision.

Following three quarter-point rate cuts to end 2025 and data showing inflation is holding steady, the Central Bank is widely expected to keep the federal funds rate unchanged this time.

But Wall Street will be tuned in to Federal Reserve Chair Jerome Powell's press conference, especially after the Department of Justice announced an investigation into Powell and after President Donald Trump is widely expected to announce Powell's replacement any day now.

On Jan. 11, Powell released a video statement in which he stated that “the Department of Justice served the Federal Reserve with grand jury subpoenas threatening a criminal indictment” over the cost of renovating Federal Reserve buildings.

Powell goes on to state that “this unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure.”

According to Powell, the investigation over the renovations is simply a “pretext,” as “the Fed, through testimony and other public disclosures, made every effort to keep Congress informed about the renovation project.”

“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on their best assessment of what will serve the public, rather than following the preferences of the President,” said Powell.

A “hold” by the FOMC next week may well be considered the final straw by Trump, leading him to announce Powell’s replacement.

The dollar index has been severely impacted by both internal and external drivers over the past week, as traders and investors have divested themselves of dollars, underlining their concerns about the United States playing a diminished role in global affairs.

The index fell to a low of 97.49 yesterday and closed at 97.52.

Despite rumours that are swirling around the ECB’s head office in Frankfurt, there is no hard evidence that European Central Bank President Christine Lagarde is planning to outlaw cash transactions of more than €1,000.

The claim appears to confuse rules already in force regarding large cash transactions in the European Union, French laws and prohibitions on cryptocurrency trading.

An ECB press release said, “The President of the European Central Bank, Christine Lagarde, refuses to justify the story from Davos, that she wants to make cash transactions over €1,000 illegal.

In 2024, new anti-money laundering rules were enacted in the EU. These create new rules on large cash and cryptocurrency transactions, though they are in no way a law against two people exchanging €1,000 in cash.

In effect, these rules mean that cash exchanges of more than €10,000 are regulated, though there are exemptions, including non-professional payments between people.

Those same rules also set limits on cryptocurrency exchanges, meaning that anonymous exchanges above €1,000 are effectively forbidden, and “due diligence” (which generally includes providing proof of ID) must be carried out by cryptocurrency service providers.

However, both these measures are a far cry from outlawing cash transactions of €1,000 or more.

The Governing Council of the European Central Bank is in no hurry to adjust interest rates, as inflation is hovering near target and they appear comfortable with investor bets for steady rates all through 2026, the accounts of their December meeting showed last week.

The ECB left its interest rate unchanged at 2% at the December 17-18 meeting and raised growth projections, which markets took as a signal that the bar for any policy easing was exceptionally high.

Poland’s economic performance has weakened the case for adopting the euro, Finance Minister Andrzej Domanski said on Sunday, arguing that the country is now outperforming most eurozone members.

In remarks to the Financial Times, Domanski said Poland is “better served by retaining the zloty for now,” citing faster growth and improving economic indicators. “Our economy is now clearly doing better than most of those that have the euro,” he said. “We have more and more data, research and arguments to keep the Polish zloty.

Nine European governments have agreed to expand offshore wind capacity across the North Sea to up to 100 GW by facilitating key cross-border projects. Ministers said the completion of these ambitions will cut electricity costs by 30% by 2040.

Several EU energy ministers gathered in Hamburg on Monday, vowing to increase offshore wind capacity in the North Sea to lower energy prices.

Belgium, Denmark, France, Ireland, Luxembourg, the Netherlands, the United Kingdom, Norway, Iceland, and NATO all signed a declaration with wind industry leaders to increase offshore wind capacity to 100 GW as part of the shared goal of massively scaling up offshore wind by 2050 and lowering energy prices.

The signing comes days after US President Donald Trump criticised Europe's climate and energy ambitions, as well as the speed at which windmills are being deployed.

British Secretary of State for Energy Security and Net Zero Ed Miliband rejected Trump's condemnation, saying that clean energy is "the right choice".

The Euro has bounced off resistance above 1.19 at its first attempt. The Tyge single currency reached a high of 1.1907 yesterday but drifted lower to close at 1.1882.

Have a great day!